Bond Expert: Friday Outlook

Swap spreads are much tighter this morning as the convexity hedgers have headed to the sidelines. Two year spread 5 basis points tighter at 38. Five year spreads also 5 tighter at 43 1/2. Ten year spreads 6 basis points tighter at 22 1/2 and 30 year spreads 6 basis points tighter at NEGATIVE 25 1/2.

There was a Wall Street Journal story over night which, I am told. said that the Fed thought that the higher rates were a function of an improving economy as well as a return of risk appetite.

Maybe the dollar is telling a different story. It has 1.41 handle this AM and gold is up $12. Breakevens on TIPS are off their worst levels (currently 184 ) but the trend there is decidedly wider.

Treasury bond prices are registering gains this morning. Some of that is real buying and some is month end buying.

Libor set at 0.65625 this morning which is down from 0.66750 yesterday.

Credit market open:

- 5yr Snr Bank CDS: BofA (BAC) 150/160 (-3), CITI (C) 345/360 (unch), JPM 93/103 (-2), WFC 113/123 (unchanged)

- 5yr Snr Broker CDS: GS 133/143 (-2), MS 230/240 (-5)

- CDS Index: IG12 140.5/142 (-1)

Comments

[Tony Petroski:]

"Swap spreads are much tighter this morning as the convexity hedgers have headed to the sidelines. Two year spread 5 basis points tighter at 38. Five year spreads also 5 tighter at 43 1/2. Ten year spreads 6 basis points tighter at 22 1/2 and 30 year spreads 6 basis points tighter at NEGATIVE 25 1/2."

Mr. Jansen. Great bond talk!

May 29 09:23 AM

[tunaman4u2:]

TBT crushed today...

May 29 03:07 PM