Prices of Treasury coupon securities have barely budged from levels which prevailed in late New York based trading yesterday. There was not any tangible news overnight to move the markets. Equity markets in Asia bounced on some strength in the technology sector and on hope that consumer retrenchment would not be too painful. European shares have also advanced. The Bloomberg story cites speculation that computer chip prices will rise. That is fine. But they also cite higher commodity prices and the benefit of those higher prices as a reason that equity prices have firmed. I suspect that once or twice in the past month they have written articles in which higher commodity prices have been the major reason for lower stock prices.
As I mentioned there was very little movement in the price of benchmark Treasury debt overnight. As we speak the yield on the benchmark 2 year note is 1.83 percent and the yield on the 5 year note is 2.67 percent. The benchmark 10 year note sits at 3.54 percent and the Long Bond will earn members of the rentier class who purchase it and choose to assiduously clip the 60 semi annual coupons 4.35 percent.
General Electric will announce its Q1 results shortly and that should cause some ripple in the price of equities. They have significant exposure to the financial markets so it will be instructive to observe what they reveal about that side of their business. And of course the markets will react to any guidance which they offer regarding prospects for the remainder of 2008.
The finance ministers and central bankers of the G7 countries as well as their subalterns gather in Washington today. I doubt that they will be channeling Jim Baker and do not expect a Plaza Accord result. I do expect that they will bow in the direction of the credit crisis with some coordinated moves to monitor systemic risks and they are likely to something to advance communication amongst policy makers. I doubt that there will be some radical result.
The group will also note the weakness of the dollar and the US recession. It is unlikely that they will do anything to prop the dollar as the ECB steadfastly refuses to lower rates and the Federal Reserve probably has one or two moves left to give. Against that background,it is hard to conjure up a plan which would give meaningful support to the greenback.
There is one noteworthy piece of economic data in the US today.The University of Michigan Confidence survey is expected to decline to 69.0 from 69.5.