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The yield curve continues to steepen, the 10-year Treasury up another 3 bps to 1.72% (the...
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Thursday, August 9, 2012, 11:15 AM ETThe yield curve continues to steepen, the 10-year Treasury up another 3 bps to 1.72% (the highest in 2 months). A steeper curve is consistent with a growing economy, writes Vince Cignarella, but does it mean the Fed - hard at work trying to suppress long yields through The Twist - is becoming irrelevant?
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The fed has been successful in making sure that there is no longer natural price discovery in the capital markets. Think about what has happened since March-09... we have had nothing but economic growth.. Every GDP datapoint is positive... yet instead of investors throwing UST's overboard... they have bid them up to record levels. It is all about the liquidity folks.
and the only reason we've seen a backup in yields this week is because there was a ton of issuance/supply this week.... once that works its way thru the system... bonds (in price) will resume their uptrend
Growth is slowing EVERYWHERE and that will lend support for UST's. I continue to believe that a 1% 10yr is more likely than a 2% 10yr.