Bond Expert: Thursday Outlook

Prices of Treasury coupon securities are a tad lower in overnight trading. The yield on the benchmark 2 year note is higher by 2 basis points and rests at 1.98 percent. As I noted earlier the issue did trade at 2.00 percent this morning. The yield on the 5 year note is also higher by 2 basis points and it trades at 2.83 percent. The yield on the benchmark has climbed by one basis point to 3.69 percent and the yield on the Long Bond is 2 basis points higher at 4.51 percent.The 2year/10 year spread is 171 basis points.

Merrill Lynch posted a larger than expected Q1 loss of $6billion and will slash 3000 jobs. Moody’s has placed the firm on watch for a possible down grade. I think in credit market speak that is a negative watch.

Commercial finance company CIT needs a bridge over troubled financial waters.

Sallie Mae reported a loss of $104 million in Q1 versus a gain of about $116 million in the year earlier period. And in an Orwellian phrasing twist the company noted that the number of loans in a status called forbearance had jumped to 16.4 percent on March 31 from 13.9 percent on December 31. In simple English forbearance means that the borrowers ain't paying!!