Treasury Market
February 24th, 2009 12:23 pm | by John Jansen |Chairman Bernanke has delivered his testimony and there is nothing earth shattering in it. The Federal Reserve realizes that the global economy is a sewer and will act according. The entire document will fortify and strengthen those who believe that the funds rate will be held low for a very long time. These are uncharted waters and recovery is dependent on several variables, chief among them the reconstitution of the system of credit creation.
The bond market had rallied early in the day. One dealer noted Japanese buying of off the run 10 years in the overnight session and the market traded to levels which triggered some buy stops. Some buyers emerged as the stock market initially retreated from its early robust opening.
Economic data released this morning are dismal and will only intensify the struggle between the powerfully friendly economic fundamentals and the powerful wave of issuance by the Treasury.
Later in the morning bonds have faded from their best level as dealers prepare to risk their scarce capital at the 2 year auction at 100PM NY time.
It is hard to get excited about this paper. The ink will barely dry on this paper and next Thursday the Treasury will announce another round of 3year/10 year/and 30 year paper.
As the yield curve flattens the WI 7 year is now only 26 ½ basis points rich to the 10 year note.
3 Responses to “Treasury Market”
By Alex on Feb 24, 2009 | Reply
Was that real money buying those off-the-run issues?
By Bman on Feb 24, 2009 | Reply
“Federal Reserve Board chairman Ben Bernanke said Tuesday that other programs have jumped ahead of the idea of the central bank buying longer-term Treasurys.”