Bond Expert: Friday Wrap

Prices of treasury coupon securities posted solid gains today in a lackadaisical and lackluster trading session. The dollar continues to trade with new vigor and its strength debilitates commodities. I think that there is a bit of a slow and delayed reaction as participants realize that if the lower energy prices should stick that the Fed will eventually have room to lower rates.There was also solid demand, particularly in the short end, from the reinvestment of coupon interest paid today.

There was a little bit of flight to quality involvement as the CMBS story I described in an earlier post rippled through the market.

The yield on the benchmark 2 year note declined 5 basis points to 2.38 percent. The yield on the 5 year note dropped 5 basis points to 3.10 percent. The yield on the benchmark 10 year note declined 4 basis points to 3.84 percent and the yield on the Long Bond slipped 5 basis points to 4.47 percent.

The 2year/10 year spread widened one basis point to 146 basis points.

The 2year/5 year/30 year butterfly is 65 basis points.

Comments

[User 244491:]

I wish you will have a smile like on your picture when Foreign Central Banks and other biggest global invesors will not buy bankrupt country's Treasuries.
America just went bust while you were sleeping honcho.
Fed will not lower as it is same proposition as to commit a suicide.
Expect rates go sharply up beginning from next meeting of the Jews (The Fed Clan) and even more if your citizens will elect first blsck president.Even at 10% your long bonds will be junk for prolonged time.

2008 Aug 16 05:26 PM