\u00a0Prices of Treasury coupon securities are posting mixed results today and those results are the mirror image of the trading pattern of the last few days. So we have the 2 year Treasury note posting a small yield increase today of about 1 basis point to 1.90 percent while the 10year note yield and the 30year bond yield have each dropped by about 4.5 basis points to 3.78 percent and 4 .59 respectively. After the dramatic curve steepening of the last week the 2 year \/10 year spread has narrowed to 188 basis points.<\/p>\n
Some of the curve flattening represents prudent traders booking profits because no one has ever been fired for doing that. Banks, mortgage servicers and hedge funds were all busy unwinding steepening trades today.In addition, I did pick up the first faint rumblings of traders alluding to some terminal funds rate at the end of the process. Conversations with participants leads me to the conclusion that many expect that the Federal Funds rate will probably reach the 2.00 percent level and then the FOMC will enter cease,desist,and assess mode. The committee members are easing in prodigious increments and (now) with alacrity to address the serious risks which confront the economy. But I think that just as the Fed seemed to pour on too much ease ,there will be a sense that they have completed their work too soon as they will stop while the economy is still in pain. The halt will occur to assess the impact of past actions because as we all known the effects of monetary policy are indeterminte and lagged.<\/p>\n
That thought process had some investors reflecting on the value of a 2year note under 2.00 percent if the funds rates final resting place is at that level.<\/p>\n
Mortgage spreads leaked wider one more time as they underperformed swaps by 3.5 basis points. Volatility is a tad more expensive across the curve.<\/p>\n
Parenthetically ,there were rumors afoot of someone purchasing Bear Stearns.<\/p>\n
Agency spreads were unchanged in quiet trading.<\/p>\n
Have a great weekend.<\/p>\n
JJJ<\/p>\n","protected":false},"excerpt":{"rendered":"
\u00a0Prices of Treasury coupon securities are posting mixed results today and those results are the mirror image of the trading pattern of the last few days. So we have the 2 year Treasury note posting a small yield increase today of about 1 basis point to 1.90 percent while the 10year note yield and the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-291","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9YXi-4H","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=\/wp\/v2\/posts\/291","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=291"}],"version-history":[{"count":0,"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=\/wp\/v2\/posts\/291\/revisions"}],"wp:attachment":[{"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=291"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=291"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/acrossthecurve.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=291"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}