Prices of Treasury coupon securities have posted modest gains today in a session marked by ennui, boredom and very light volume for an end of month session. The weather here in metropolitan New York is spectacular today and I suspect that many bond market participants decided that after a week of tough toil that it was appropriate to get an early jump on the weekend festivities.The yield on the benchmark 2 year note dropped by 6 basis points to 2.62 percent. The yield on the new benchmark 5 yield note was lower by 4 basis points. The yields on the benchmark 10 year note and 30 year bond declined by 5 basis points to 4.03 percent and 4.70 percent respectively. The 2 year/10 year spread widened one basis point to 141 basis points.
I think I am going to introduce an innovation on a slow Friday and I will begin to follow the 2 year/5 year 30 year butterfly spread. That spread closed today at -56 basis points. At the moment of the auction yesterday it was trading at -53 basis points. The move from -53 basis points to -56 basis points indicates that the 5 year note has outperformed the “wings” of the butterfly.
There were several pieces of economic data available for perusal today. Most printed pretty much as expected and demonstrate that the economy is mired in a soft patch. In my opinion the most meaningful number of the bunch was the personal spending data. Economists at UBS note that at this pointing the quarter, real consumer spending is rising at a paltry 0.2 percent. That follows growth of 1.0 percent in Q1 and 2.3percent in Q4 2007 and 2.8 percent in Q3 2007. I think there is a trend in place there!
Next week brings the employment data and the (hopefully)end of the process of picking a Democratic candidate to succeed the incumbent.
Have a great weekend.