Administrative Note

May 27th, 2009 4:15 pm | by John Jansen |

I will not write a closing piece as i have some personal business to attend to. This has been another historic day in the bond market and I thank the myriad of folks who commented.

How about some closing levels for the record:

The yield on the 2 year note increased 2 basis points to 0.97 percent. The yield on the 3 year note climbed 3 basis points to 1,49 percent. The yield on the 5 year note soared 11 basis points to 2.41 percent. The yield on the 10 year note catapulted 17 basis points higher to 3.72 percent. The yield on the bond rocketed 14 basis points to 4.63.

The 2year/10 year spread is a record 275 basis points.

The 2year/30 year spread is 366 basis points. The record on that is 369 on October 05 1992 at about 1130 AM. i am a very sick man!!!

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  1. 15 Responses to “Administrative Note”

  2. By y81 on May 27, 2009 | Reply

    You are sick, but we love you.

  3. By Allan on May 27, 2009 | Reply

    In the deepest moments of the crisis, someone joked saying the only really valuable assets would soon turn out to be water, canned food and ammunition…

    I’m not sure if we’re really moving that way, but I’m suddently considering that they may be pretty more valuable than treasuries… hehehe

  4. By matt on May 27, 2009 | Reply

    Why the steepness? Is the central bank failing to keep the long end down? Are they sacrifising mortgagers in order to boost profits at the banks? Is this from the foreign central banks transferring to the front end of the curve? Does that indicate a lack of confidence in the dollar long term? Doesn’t this provide additional risk to the USG’s roll?

  5. By Greg on May 27, 2009 | Reply

    Uncle Sam is financing long term liabilities with short term debt. That tactic hasn’t worked well for anyone else who tried it — but Bernanke and Geithner have staked their reputations on the idea…

    Actually, I believe it was Bob Rubin (back when he was Trsy secretary under Clinton) who suggested the government reduce its average debt maturity to “save money”.

  6. By K T Cat on May 27, 2009 | Reply

    I hope you’re feeling better soon!

  7. By BL on May 27, 2009 | Reply

    Junk bond yields continue to drop.

    I think this is mostly about money moving out of safe havens to riskier higher yielding assets. The USG was able to borrow money really cheap there for a while, but those days are ending.

    So, what’s a reasonable equilibrium spread between treasuries, investment grade, and junk?

    BL

  8. By BL on May 27, 2009 | Reply

    PS, once the economy really recovers, the gov’t will raise taxes, lowering the need to borrow and firming up bond prices.

    That should cheer you all up!
    BL

  9. By Griff on May 27, 2009 | Reply

    higher taxes = best news ever. I cant wait to spend $5 / kwh to light my home with “cheap green” energy

    can always find work..”the world needs ditch-diggers too”

  10. By DFTT on May 27, 2009 | Reply

    Sliced thru 3.5% like a ginsu knife, 3.75% within reach, with the possibly of 4% according the charts.

    http://stockcharts.com/h-sc/ui?s=$TNX&p=W&b=5&g=0&id=p60939745610

  11. By ks on May 27, 2009 | Reply

    recalling back 2003

    How long did the curve stay that steep?
    Was it as violent and quick as this move?
    What eventually caused the curve to flatten?

  12. By Sam on May 28, 2009 | Reply

    For the non-bond savvy folks (like me), a couple of pointers to help us wrap our heads around this:
    http://online.wsj.com/article/SB124343157431958511.html#articleTabs%3Dcomments
    http://www.newyorkfed.org/research
    /quarterly_review/1994v19/v19n2article5.pdf

  13. By Dr.Dan on May 28, 2009 | Reply

    Isn’t China worried ?
    with all the VOL in bond markets.

    They hold close to 2 trillion.

    Are they going to act decisive ?

  14. By Alan Greenspend on May 28, 2009 | Reply

    Fun times! I’ve been waiting for this “pushing on a string” moment since early’05. Not sure if this is the actual transition, I was expecting November from the new debt bubble.

    Forex volatility will be a likely early warning before TIC data and related spread info, is my 3 cents on the prediction front.

    On the edge of my chair waiting for the big players to make their move out the door first from the poker table.

    Wonderful work as always John and quite a treat Greg!

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  2. May 27, 2009: PrefBlog » Blog Archive » May 27, 2009
  3. May 27, 2009: Brad Setser: Follow the Money » Blog Archive » The Treasury market, in a world no longer dominated by central bank reserve managers

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