Investor resistance mounted last week as the US Treasury sold US$118 billion of bonds in three separate auctions. The bid-cover ratios were weak, with Thursday's auction seeing the bid-cover ratio at a ten-month low of 2.61 times. Yields will inevitably rise as governments seek to entice increasingly stuffed investors to buy more bonds. This shouldn't worry good quality corporate borrowers, as it seems that their bonds will be increasing sought after and therefore should be sold at relatively attractive yields, but for investors this is going to be a losing proposition, as mark to market losses mount on existing portfolios.This brings us back home. Imposing increased liquidity requirements on the banks and mandating higher quality holdings is good for governments that need forced buyers of their paper, but guess what happens to the value of the banks' liquidity portfolios as yields rise? Perhaps the banks should be required to hold BHP Billiton bonds instead.