Opening Comments March 27 2008

March 27th, 2008 6:39 am | by John Jansen |

 Prices of Treasury coupon securities have sagged in overseas trading . The yield on the 2 year note has jumped 4 basis points to 1.71 percent while the yield on the 5 year note has moved higher by 5 basis points to 2.55 percent.In the longer maturities the yield on the benchmark 10 year note is up 3 basis points to 3.49 percent and the Long Bond yield has added 4 basis points and rests at 4.35 percent. The 2 year/10 year spread is 179 basis points.

Equity markets in Europe are trading higher this morning ,with most posting gains of about 1 percent. Futures markets indicate that the US markets will opened with a solid bounce following the sloppy trade of yesterday. The markets have taken solace in words from the ECB and the Bank of England that each was prepared to add liquidity to the money markets to ease tensions and financing.

Today is an historic day in the US money markets as the Fed will hold the first of its Term Security Lending Facility . The Fed will take a wide range of investment grade collateral at this operation and it will be interesting to see the results and the effect on the repo market.

Strap yourself in for some heavy doses of Fedspeak today as six Fed officials talk throughout the day.

The Treasury will auction $18 billion of 5 year notes at 100PM EDT . The 2 year auction yesterday drew robust demand from yield curve traders and it will be interesting to see if that auction sated demand or if there is still appetite for the belly of the curve.

The one noteworthy piece of economic data today is the weekly initial claims data which will enlighten participants about the current state of the labor market and the mindset of business mangers regarding the depth of the current contraction.

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