Bond Expert: Friday Outlook

by: John Jansen

Prices of Treasury coupon securities registered small mixed changes in overseas trading ahead of the shortened trading day which will lead into the Labor Day holiday weekend. The yield on the 2 year note has climbed one basis point to 2.37 percent. The yield on the 5 year note is lower by 2 basis points at 3.07 percent. The yield on the 10 year note is unchanged at 3.78 percent and the yield on the Long Bond is unchanged at 4.38 percent.The 2year/10 year spread is flatter by a basis point at 141 basis points.

In Europe, Euribor hit an all time high of 5.197 percent as the stresses and strains of the financial crisis remain unabated over a year after it began.

European inflation slowed more than expected in August to 3.8 percent YOY from 4.0 percent in July.

The European Commission’s measure of economic sentiment fell more than expected to 88.8 from 89.5 in July.

In Switzerland its leading indicator slipped to a 5 year low as consumption and exports slowed.

Eurozone unemployment held steady at 7.3 percent.

Consumer confidence in the UK rose three points to -36 in August from -39 in July. The rise is not especially noteworthy as the July level of -39 was the lowest level since 1974. So, in spite of the small increase in the index sentiment remains depressed and near multi decade lows.

There is quite a bit of economic data in the US but the question is if many participants will be around to reinterpret it. There is income and spending data and the Chicago Purchasing Survey. In addition the University of Michigan will release the final cut of its monthly sentiment survey.

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