The U.S. government held an auction of its 30-year Treasury bonds this week, but hardly anyone wanted to buy them at the anticipated 4.41% yield. They ended up going at 4.449%. One dealer called it a "massive boycott."

Furthermore, the 20 primary U.S. dealers had to purchase nearly 90% of the offering, since foreign central banks bought only 10.7% of the $9 billion worth of long bonds. Bloomberg reported that 10.7% figure as the "lowest on a new 30-year bond since the Treasury resumed sales of the maturity in February 2006 after an almost five-year hiatus."

Is the rest of the world getting tired of buying our debt? Are they concerned about our economy and our ability to pay the interest on that debt? The U.S. Federal Reserve seems to think that lowering interest rates like mad is a good way to stimulate our economy and keep it out of recession. But what's good for one group (like those in their 20s and 30s who still want to buy a house) is not good for those who live off their income (like retirees) as they watch their interest income dwindle with each rate cut. 

Besides, here at Elliott Wave International, we don't actually buy the idea that the Fed has the means to save the economy from recession anyway, since the only thing it can do is offer more credit, which nobody really wants right now. (See above.) But even if you do buy the argument that the Fed can save the day, does it still have time to fend off a recession?

 Our Elliott Wave analyst, Pete Kendall, printed a chart in yesterday's Short Term Update, which suggests that all this talk about the "coming" recession is stuff and nonsense. It's here. The Institute for Supply Management published its index for the service industry earlier this week, which shows that the activity of banks, retailers and construction companies during January dropped steeply from 54.4 to 41.9. Anything below 50 on this particular index shows that the service industry is contracting rather than expanding. Take a look at the Short Term Update chart for yourself:

Oddly enough, Bloomberg also reported that "Treasuries briefly pared losses after the Institute for Supply Management denied speculation that the group would revise its latest report, which showed service industries contracted the most since 2001." A spokeswoman emailed the reporter that there was no error in the original report and that no revision was planned.

So while it might be comforting to think that the institute must have made a mistake, our Short Term Update sees the situation for what it is:

"The speed and depth of the move is a critically important aspect of the reversal. From a level representing relative health, the index turned in the biggest drop in its 11-year history. This is the 'light-switch' quality of the trend change that The Elliott Wave Financial Forecast has made reference to in the credit sector and elsewhere."

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