Overnight Treasury Market Musings

February 29th, 2016 6:19 am | by John Jansen |

The 10 year Treasury continues to cheapen versus Bunds. I clocked the spread at 163 basis points this morning. I had marked that spread as narrow as 140 basis points on Feb 11 when the 10 year US traded at 1.58.

Breakeven inflation rates also continue to march wider. The recent narrow was also back on Feb 11 when 10s traded at 116 basis points. I clocked that spread at 143 basis points this morning.

The 10 year point on the Treasury curve is ludicrously expensive. The 5s 10s 30s butterfly which I follow traded earlier this AM at -35.7 basis points. I have been writing this blog since I retired in fall of 2013 and I do not believe that it has ever traded that rich in that period. I do not believe it traded that rich at the height of the Fed’s QE exercise when the central bank was hoovering in the belly.

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