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The bond market is closed for Columbus Day, but bond futures are trading and the long end is...

The bond market is closed for Columbus Day, but bond futures are trading and the long end is plummeting. The 30 year has now given up all of its post-Operation Twist announcement gains, and the 10 year price is significantly lower than it stood on September 21.
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Comments (5)
  • Tack
    , contributor
    Comments (14579) | Send Message
     
    Thank goodness.

     

    The last thing we need is a flatter yield curve and overall lower rates. Lenders need more, not less, incentive to lend long term. If rates would start creeping up across the board, we'd also see borrowers get off the sidelines and make loan demands to lock in lower rates.
    10 Oct 2011, 12:13 PM Reply Like
  • J 457
    , contributor
    Comments (956) | Send Message
     
    Rates moving up may not only encourage "on the fence" borrowers to make the plunge, but also cause equities to move lower. Why risk the 5% daily swings when you can get a lower but more stable long term yield. We shall see.
    10 Oct 2011, 12:20 PM Reply Like
  • Tack
    , contributor
    Comments (14579) | Send Message
     
    j457:

     

    The stimulation that increased borrowing and lending will produce will move the economy and market higher, not lower. The oft-stated cliam that higher rates suppress economic activity is specious, when rates are at all-time lows. Any negative effect from higher rates is many, many percetange points away.
    10 Oct 2011, 12:27 PM Reply Like
  • Joe Eifrid
    , contributor
    Comments (343) | Send Message
     
    Cause equities to move lower? Sure would help the financials which could lead the market up higher.
    10 Oct 2011, 12:47 PM Reply Like
  • J 457
    , contributor
    Comments (956) | Send Message
     
    Tack:

     

    We still need the banks to lend, knowing loose standards is in part why we're in the predicament that we're in. I also think Mainstreet is more concerned with the debt issue than many think. That in itself could cause severe problems in the next few months as once again in November the debt ceiling debate ensues. Third, we also have this EU problem. The sooner Greece defaults the sooner the other PIIS bondholders will agree to take a haircut for fear of receiving nothing. This postponement of the inevitable continues to stifle our markets and I suspect will for some time- especially the financials. Some say financials lead the way to recovery, and they cannot lead until EU is solved. Until then, we are today at the low volume top of this trading range and will probably retest 1060-1080 within the next week.
    10 Oct 2011, 12:50 PM Reply Like
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