Early Update

March 28th, 2008 8:39 am | by John Jansen |

 Prices of Treasury coupon securities are posting mixed results this morning as diverse factors influence prices at the front end of the curve and the back end of the curve. The yield on the 2 year note is 1 basis point higher at 1.69 percent and the yield on the 5 year is unchanged at 2.57 percent. The long end has seen improvement with the 10 year yield lower by 3 basis points to 3.30 and the Long Bond yield slipping 4 basis points to 4.35 percent.

The long end has benefitted from the drop in the core PCE to 2.0 percent which is the top of the Fed’s preferred comfort zone for inflation. The front end of the market is suffering from the sharp rise in the repo rate which is trading at 2.35 percent after being markedly lower earlier in the week.

Trading activity is light as Monday is quarter end and that will restrain participants from establishing new risk positions.

JCPenney issued a warning and its stock is down sharply in pre market trading. I am not a maven of retail stocks but the release from the company is germane.The company reported that sales through Easter were well below expectations and slashed its Q1 profit forecast to 50 cents per share from the 75 cents than had been anticipated.

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