Bond Market Opening March 09 2009
March 9th, 2009 7:59 am | by John Jansen |Prices of Treasury coupon securities are posting virtually no changes this morning as the market for US Treasury bonds ignores a welter of bad economic data and indications of a still wobbly financial system. European stock markets are quaking and the US market is manifesting signs that it will open with sharp losses when trading begins in several hours.
The yield on the 2 year note has declined one basis point to 0.94 percent. The yield on the 3 year note has edged higher by a basis point to 1.36 percent. The yield on the 5 year note has also climbed a basis point to 1.88 percent. The yield on the 10 year note has edged higher by a basis point to 2.8 percent. The yield on the 30 year bond is unchanged at 3.55 percent.
Equity markets in Europe have declined, on balance, between 1.50 percent and 2.0 percent. The Nikkei dropped more than one percent and the Hang Seng fell nearly 5 percent.
Banking sector woes abound.
Iceland announced that it was taking over Straumur-Burdaras. It was the last standing of the four main Icelandic banks.
HSBC stock sank to a 14 year low on concerns about profits at it US HSBC unit. The Chairman of HSBC stated the very obvious and noted that the purchase of Household Finance in 2003 was a mistake.
Lloyds Banking group will receive guarantees from the UK government and in turn the government will control 75 percent of the banking entity.
Fortis stock soared as BNP took over certain banking operations and insurance operations. The government will guarantee the insurance operations.
The World Bank said that the global economy will shrink for the first time since WW2.
Japan posted a current account deficit for the first time since 1995 as the global recession battered exports.
New Zealand construction contracted for fourth consecutive quarted and home sales fell the most in four years.
To demonstrate the ubiquitous nature of the global slump , Turkey reported that IP fell more than 21 percent in January.
There is no data in the US today so the market will slavishly observe the movements in the equity markets. At the moment the process of establishing positions for the Treasury auctions later in the week is trumping the weakness in stocks. I suspect that will be the case unless we flirt with ot punch through Friday’s lows.
Stocks are even ignoring the news of a $41 billion takeover of Schering Plough by Merck. No one is trumpeting the synergistic gains or the message that the action sends about valuations. Fear is still ascendant while greed is hibernating.
2 Responses to “Bond Market Opening March 09 2009”
By Alex on Mar 9, 2009 | Reply
Trade balance figures in the current account data had already been in the red: January’s Y844.4 billion trade deficit was the third straight month of red ink.
What contributed to pushing the overall current account balance into a deficit, however, was a decline in the income surplus, which fell 31.5% on year to Y992.4 billion. That was a result of Japanese firms’ decreased earnings from foreign stocks and bonds, a ministry official briefing reporters said.
“Until recently, a lot of analysts believed that Japan’s income surplus could cover the red ink in trade balance,” Dai-ichi Life Research’s Nagahama said. “But that is unrealistic now because falling interest rates worldwide and a worsening financial crisis, especially in the United States, are expected to cut into Japan’s income surplus.”
By John Jansen on Mar 9, 2009 | Reply
Alex,
Thank you.
JJJ