Prices of Treasury coupon securities posted modest gains today as economic releases paint a grim picture of a stumbling economy and announcements of chunky layoffs by former financial giant Citibank (C) raise the specter of a deep and harsh recession.
Against that background, the yield on the 2 year note edged lower by one basis point to 1.52 percent. The yield on the 3 year note dropped 2 basis points to 1.52 percent. The yield on the 5 year note fell 3 basis points to 2.30. The yield on the 10 year note has dropped 6 basis points to 3.68 percent and the yield on the Long Bond fell 3 basis points to 4.20 percent.
The 2 year/10 year spread narrowed 5 basis points to 248 basis points.
The 2 year/5 year/30 year butterfly remains at recent wides at 80 basis points.
Henry Paulson and his minions abetted the strong performance of the 10 year note as participants report that the Treasury was observed buying mortgage backed securities today. Others report that the central bank bid for agency paper remains light and the central banks are still channeling money into the Treasury market.
Many participants have focused on the release of the minutes of the last FOMC meeting as a key data point this week (Wednesday). With the country in an interregnum period between Administrations, many feel that the heavy lifting will be the work of the Federal Reserve. With the funds rate tottering near zero, investors will be watching to see if the FOMC discussed unconventional policy steps which might be employed, if necessary.
Swap spreads are tighter by 6 ½ basis points in the 2 year sector, 3 basis points in the 5 year sector and 1 ¼ basis points in the 10 year sector.
Corporate bonds
Participants in the corporate bond market describe a deadly, dull depressing day. The level of activity from clients was quite subdued.The IG 11 is currently 208/210. It had opened 8 wider this morning on a wide 210214 quote.
There was one new deal. An entity with the appellation Sempra Energy (SRE) is offering $300 million 10 year bonds. That aforementioned corporation carries a BAA1/BBB+ rating (not the strongest for sure) but the company will likely suffer the gross indignity of having a 10 percent coupon attached to the offering. That would be T+ about 630 basis points.
That might be good news for investors as some recent deals which priced at a steep concession are trading quite well.
The American Express 5 year deal which I have chronicled here for several months is 685/660. Regular readers will recall that it traded at 800.
Pepsi issued a 10 year which priced around T+425 basis points. That bond has raced back to pre-pricing levels and is 290 bid.
Similarly, an IBM 10 year which priced in the low 400s is now 280ish.
Finally, a GE 10 year which priced around T+ 4 3/8 is now 355/335.
So, it is a slow grind back but as the pricing event fades into history quality credits have shown resiliency and the ability to attract buyers at the wider spreads.
Related Articles
|
Top Rated Comment Streams:
-
1.Hedged In661
- 2.
-
3.Smarty_Pants401
-
4.axelrod608292
-
5.cos1000292
- Free E-Newsletters
- About Seeking Alpha
- About Us
- Contact Us
- What's New
- Readers Feedback
- Advertise With Us
- Contributors
- Contribute an Article
- Feature Your Book
- Our Contributors
- Anonymous Contributions
- Dispute an Article?
- Legal
- Terms of Use
- Privacy
- Copyright
This article has 1 comment:
-
kurt walter
-
409 Comments
Nov 18 01:49 PM