Bond Expert: Friday Wrap

Prices of Treasury coupon securities registered sharp, but in my opinion, tempered gains today in response to the disappointing earnings news and forward outlook from bellwether industrial and financial giant General Electric (GE). Additionally,the University of Michigan preliminary reading for April Consumer Confidence skidded to 63 from 69.5 in March. This level represents a 26 year low for the index. The consensus had expected a decline to 69. The benchmark 2-year note closed 10 basis points lower in yield at 1.74 percent. The 5-year note closed at 2.57 percent as its yield fell 11 basis points. The benchmark 10-year note finished the day 7 basis points lower in yield at 3.47 percent and the yield on the Long Bond dropped 6 basis points to 4.29 percent.The 2-year/10-year spread closed at 173 basis points.

As I noted in an earlier posting trading activity was very subdued today. I think I speak with a reasonably representative cross section of the fixed income community and uniformly they reported very little client activity even after stocks dove off the cliff. I am not sure how to account for the apathy which prevailed today. There is a plethora of data next week and possibly some investors want a glimpse of that data before they commit cash at historically low yield levels. Next week will bring the release of data on retail sales, CPI, PPI, IP, Empire Survey, and Philadelphia Fed. There is also a National Association of Homebuilders Survey as well as Housing Starts. So by the end of next week investors will have a much clearer vision of the depth of the recession.

Life intervened today several times and blogging output suffered. My apologies and enjoy the weekend.