Treasury Market Update

May 29th, 2014 11:34 am | by John Jansen |

The bond market continues its rally unabated with 10 years trading at 2.41 percent this morning. In terms of specifics I have heard of bank portfolio buying in the 4 year part of the Treasury curve. In the bigger picture I think the simple theme is that there is a strong likelihood that Japan and China are buying US assets. The Federal Reserve is buying at a diminished pace but they continue to buy large blocks of paper. Asset managers stateside face  stiff penalties if they are underfunded. That is a powerful array of buyers and they continue to ask for offerings. Against that backdrop it is my sense  that at best the dealer community is flat and holds a propensity to sell first and buy later. That has been a prescription for a smaller bonus pool.

I am not quite sure when the appropriate moment to sell will be manifest but for now I would wait for 300PM tomorrow when they blow the all clear whistle following the month end offering wanted orgy.

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