Some Thoughts on the Early Rout

March 27th, 2008 8:19 am | by John Jansen |

In very early trading today the Treasury market is a sloppy mess with rates higher by 5 basis points to 8 basis points. I have not been able to discern the seller or sellers. There is a seller at 100PM EDT, Hank Paulson, as he is pushing $18 billion 5 year notes onto the street. The 5 year note is the worst performing issue on the list today so certainly there is some set up for the auction occuring.

The calendar notes that quarter end is nigh and possibly that contributes to the trade as some portfolio managers do some rebalancing. Stock futures are a bunch better today so maybe there are investors lightening up on bonds which have performed so well and redirecting the proceeds to equities.

Finally ,some have cited the story about the Korean pension fund which I linked to earlier as a source of the market’s discomfort as participants ponder a future when Treasuries are shunned rather than loved.

Separately,Morgan Stanley has announced a benchmark size 10 year deal for today. It will come at a big concession of about 40 basis points to outstanding MS debt in that sector.

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  1. One Response to “Some Thoughts on the Early Rout”

  2. By WalterDS on Mar 27, 2008 | Reply

    There are rumours of another US investment bank about to hit the wall, the talk of the bank filing for chapter 11 following earlier, analysts warning about large Q1 losses/writedowns. Shares of the bank are already down 7.5%. Are the rumours correct?

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