Across the Curve

Bond Market Opening April 02 2009

Prices of Treasury coupon securities have taken a bit of a nasty header overnight as resuscitated and revived animal spirits have fostered robust rebounds in equity markets around the globe. Investors are sniffing recovery and stability and are responding by throwing money at stocks.

What are some of the signs that they are observing which has the pack in a frenzy?

This morning the data on UK house prices showed that UK house prices rose for the first time since October 2007 in March. Prices  incewased 0,9 percent. Every economist Bloomberg survey had anticipated a decline.

Investors are also reviewing the data in the US released yesterday and drawing solace from it.

The ISM report showed that index is in a very gentle upswing after king a cycle low in December. The New Orders component which is a leading indicator jumped 8 points to 41.

Car sales unexpected climbed to 9.8 million units from 9.1 million units in February.

And the Pending home Sales index climbed more than expected.

The Financial Accounting Standard Board meets today regarding mark to market accounting rules. There is a mob, akin to the mob in London yesterday calling for the dissolution of capitalism,prodding the FASB to change accounting rules in order for banks to apply substantial judgement when valuing assets. Toxic ones. Toxic ones where there is no market. When they cave in to this they can drop the S from their acronymic name as they will lack any Standard.

The yield on the 2 year note has jumped 6 basis points to 0.86 percent. The yield on the 3 year note has climbed 6 basis points to 1.19 percent. The yield on the 5 year note has also increased 6 basis points to 2.72 percent. The yield on the 10 year note has also moved higher by 6 basis points to 2.72 percent.  The yield on the Long Bond broke the 6 basis point mold as it climbed just 5 basis points to 3.55 percent.

The 2 year/10 year spread is 186 basis points.

The 2year/5year/30 year spread is 101 basis points.

Today the Treasury will announce a 10 year TIPS auction which will be held on Tuesday April 7.