from Zero Hedge:
A month ago we showed the chart that we suspect scared Bernanke straight and required his verbal intervention to de-froth the US Treasury market. The huge surge in ‘fails-to-deliver’ in the US Treasury market meant something was very wrong as this critical indicator of both collateral shortages and technical carry trade unwinds was flashing a very angry red (and as Barclays notes “was ready to feed upon itself”). Bernanke’s jawboning provided just the right amount of concern at the Taper that the market began to clear a little and ‘fails’ have been reduced (though we note are rising once again as un-Taper exuberance returns). The problem is – exactly the same critical dilemma is now hitting the JGB market and as JPMorgan warns, the sharp rise in fails in June suggests that there is perhaps more stress in the JGB market than that conveyed by the recent stability of JGB yields.
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