Dec 22. Yields on the rise

Dec 22. Yields exploded higher Monday, with tens up over 13 bps to 3.68%.  Curve steepened to new high, with 2/10 spread up 6 bps to 263.4.  It’s also worth noting that ten year tip to treasury spread blew out to 235 (up 5+).  Having watched this spread in relation to other market indicators, I don’t think it has much predictive value, but still, it’s easily a new high for the year.  In the beginning of the year during the crisis is was below 50 bps.  In March when stocks bottomed it was around 85 bps and at that time 2/10 was around 160 to 170. 
–Ironically this is the same day Obama said the gov’t can’t continue to spend “as if the hard earned tax dollars of the American people can be treated like monopoly money.” (Real Clear Politics)
–(AP) — Nobel Prize-winning economist Joseph Stiglitz warned there’s a “significant” chance the U.S. economy will contract in the second half of next year, and urged the government to prepare a second stimulus package to spur job creation…”The likelihood of this slowdown is very, very high,” Stiglitz told reporters in Singapore. “There is a significant chance that the number will be in the negative range.”
–Wash Post says unemployment benefit funds in 40 states “will go broke within two years.” 
–Ford offers buyouts/early retirement to all 41k workers…”We’re just going to try to right-size our manned capacity and align it with demand,”

Posted on December 22, 2009 at 5:15 am by alexmanzara · Permalink
In: Eurodollar Options

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