Bond Market Open September 28 2009

September 28th, 2009 7:31 am | by John Jansen |

Prices of Treasury coupon securities are either unchanged or just a tad lower in overseas trading.

The yield on the 2 year note has increased a basis point to 0.9 percent. The yield on the 3 year note has increased by a basis point to 1.47 percent. The yield on the benchmark 5 year note is unchanged at 2.37 percent. The yield on the 7 year note has climbed a basis point to 2.99 percent. Yields on the 10 year note and the 30 year note are unchanged at 3.32 percent and 4.09 percent, respectively.

The relationship between the 10 year note and the 30 year bond is unchanged at 77 basis points.

The 2year/ 10 year spread is a basis point narrower at 233 basis points.

The 2 year/5 year/30 year spread is 34 basis points.

Today is the Jewish holy day of Yom Kippur which will have many of our Jewish friends away from the financial markets as they observe that day. I expect that reduced staffing will lead to a reduction in trading volumes.

There are no economic releases scheduled for today.

In the FX market the yen posted a new cyclical high against the dollar as it touched 88.24 . Some of the gains are end of quarter repatriation ans some are motivated by comments from the Finance Minister who said that the moves were not “excessive”. He has since stated that he had been misinterperted and the yen has surrendered some of its gains.

In the UK home prices rose the most in 2 years.

While there is no economic data today, the remainder of the week will bring more than a dollop on information. There will be the monthly reading on manufacturing in Chicago as well as the national data from the ISM. There is data on consumer confidence and personal income.

We will have an opportunity to gauge business confidence in the economy with the weekly jobless claims data on Thursday.

On Friday we receive the monthly labor data.

There is no coupon supply from the Treasury but there is an announcement of supply for next week. The Treasury will be an active seller next week. There will be a 10 year TIPS auction on Monday (around $ 7 billion) . That will be followed by 3 year notes on Tuesday (around $ 40 billion) ,10 year notes on Wednesday (around $ 20 billion) and Long Bonds (around $ 12 billion) on Thursday.

I think that someone has posited that a body in motion tends to stay in motion. I expect that will be the case this week and I think the Long Bond will attempt to surge toward the 4.00 percent threshold. I have no basis for that opinion other than the very positive price action of late.

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  1. 6 Responses to “Bond Market Open September 28 2009”

  2. By Chicken on Sep 28, 2009 | Reply

    A body in motion – Newton was a physicist and he recognized the forces of friction (both static and dynamic) in his theorems. IMO something’s keeping the skids greased, I’d love to know it’s not government intervention (which could possibly cease without notice).

    Still trading accordingly until the music stops.

  3. By John Jansen on Sep 28, 2009 | Reply

    What I wrote about Newton is virtually all I know. Didnt he also spend some time pondering apples falling from trees?

  4. By Chicken on Sep 28, 2009 | Reply

    Yes, I suppose so. The force of gravity refers to Newton’s second law where gravity is accounted for. Intuitively we can say the market isn’t likely to reach infinity however the learning curve remains a challenge for many students, myself included:

    “Cognitive scientists (scientists who study how people learn) have shown that physics students come into physics class with a set of beliefs which they are unwilling (or not easily willing) to discard despite evidence to the contrary. These beliefs about motion (known as misconceptions) hinder further learning. The task of overcoming misconceptions involves becoming aware of the misconceptions, considering alternative conceptions or explanations, making a personal evaluation of the two competing ideas and adopting a new conception that is more reasonable than the previously held-misconception. This process involves self-reflection (to ponder your own belief systems), critical thinking (to analyze the reasonableness of two competing ideas), and evaluation (to select the most reasonable and harmonious model which explains the world of motion). Self-reflection, critical thinking, and evaluation. While this process may seem terribly complicated, it is simply a matter of using your noodle (that’s your brain).”

    http://www.physicsclassroom.com/Class/Newtlaws/u2l3b.cfm

    Unfortunately, that’s the easy part. My quest continues…

  5. By Chicken on Sep 28, 2009 | Reply

    That is, gravity generally plays an important role when it comes to understanding and accounting for friction.

  6. By Tyler K on Sep 28, 2009 | Reply

    “Yields on the 10 year note … 3.32 percent ”

    3.294 on the tape.

    I hear that train a comin’
    just rolling round the bend…

  7. By Chicken on Sep 28, 2009 | Reply

    “I got live stock, I got live stock, I got cows I got pigs I got sheep I got mules I got … all live stock”.

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