Unexpected? Long-term Treasury yields slide after budget deal

Long-dated Treasurys unexpectedly (to some) post a big rally in wake of the debt ceiling deal, with the 10-year yield tumbling 9 basis points in the past couple of hours to 2.67%.

The selloff and subsequent bounce-back of 4-week paper can be explained by fears (now ended) of some sort of short-term debt default, but longer-dated paper was under no such threat and might have been thought to rally thanks to the slowdown caused by the shutdown, and then sell off once ended. Go figure.

The Fed's Beige Book reported slowing growth in 4 of the 12 Fed districts isn't hurting, but the big move in Treasurys occurred before the 2 ET release.

TLT +1%, TBT -2%.


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Comments (12)
  • bbro
    , contributor
    Comments (11227) | Send Message
    Now... can we go back to obsessing about the word taper??
    16 Oct 2013, 02:49 PM Reply Like
  • Regarded Solutions
    , contributor
    Comments (20531) | Send Message
    we have had so many words to have fun with: Taper, fiscal, ceiling, default, shutdown, shutopen....too bad we cant have fun with words like PROFITS, JOBS, WEALTH!
    16 Oct 2013, 02:53 PM Reply Like
  • notta lackey
    , contributor
    Comments (131) | Send Message
    One word comes to mind concerning owning a brand spanking new 30 year treasury right now. Suckah.
    16 Oct 2013, 04:33 PM Reply Like
  • Gary Jakacky
    , contributor
    Comments (2954) | Send Message
    As usual SA you confuse a 1 day rally with a meaningful move. Bonds rallied one day on the "Non taper" news, too...where are they relative to then? Bonds have rallied because the budget deal, if you look at it, REDUCES gov't spending for the 2nd year in a row. (Take THAT, democrats!). Once we again focus on economic growth data, bonds will resume their selloff.
    16 Oct 2013, 02:56 PM Reply Like
  • David Pinsen
    , contributor
    Comments (2197) | Send Message
    Interestingly, although TLT is up today, so are my March $101 strike TLT puts.
    16 Oct 2013, 03:17 PM Reply Like
  • Gary Jakacky
    , contributor
    Comments (2954) | Send Message
    Good to hear it...always like to see guys get closer to rich. The puts probably increased in value because bonds will be ore volatile between now and then, as well as (perhaps) selling off. Good luck. Let us know your final result.
    16 Oct 2013, 03:37 PM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
    Reducing government spending won't help growth. The size of the US government is modest relative to most developed countries. And Democrats won this round. The Republicans lost.
    16 Oct 2013, 06:17 PM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
    Implied volatility ...
    16 Oct 2013, 06:17 PM Reply Like
  • Marco Mazzocco, CFA
    , contributor
    Comments (193) | Send Message
    First we'll have to sift our way through all the back dated data to get the scent back on Treasuries...maybe a payroll friday on the 25th? They should just release everything at once and let the strongest market win.
    16 Oct 2013, 03:06 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11226) | Send Message
    Looking for logic in the Fed infested bond market is like looking for a Bible @ Lindsay Lohan's house.
    16 Oct 2013, 04:40 PM Reply Like
  • wmateri
    , contributor
    Comments (580) | Send Message
    There was a lot of political drama today but, in the end, Republican defeat was complete and utter. Why the President or Senate would ever listen to another Republican proposal is beyond me as they have clearly demonstrated a lack of courage of their convictions. The Democrats stared them down completely. Thus it is clear sailing to wherever for stocks as any implied threat in the next debt ceiling debate is clearly not worthy of attention. With Yellen in the Fed and Obama in clear control of Congress, stocks don't have a worry in the world. Now if only those pesky earnings would behave.
    16 Oct 2013, 07:52 PM Reply Like
  • RS055
    , contributor
    Comments (5616) | Send Message
    yes it was indeed a great success. All those Chinese that were nervously looking at their pile of Dollars and wondering if they were worth anything - have now seen grown adults in the US fight toth and nail for some - and terrible, terrible suffering imposed due to shortage of same.
    So- must be worth something right?
    16 Oct 2013, 09:35 PM Reply Like
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