Bond Market Update
The Treasury Dept. sold $14B in the 10 year note auction, indirect bidder participation (foreign central banks) came in at 31.4%, compared to 11.7% in April. The dollar rocketed to a 6 month high vs the Euro.
After the Retail Sales Report, BNP Paribas commented ``There is a persistent short position in the market,'' meaning a segment of investors betting debt prices will fall. That's preventing the market from going down.''
``Treasuries are still in demand,'' Akio Shimizu, a Treasury manager in Tokyo at Mitsubishi Trust & Banking Corp., a unit of Japan's second-largest lender by assets, said before the report. ``The flight to safety from corporate bonds is not over yet.'' Yields may fall to 4.1 percent in coming weeks, Shimizu said.
Treasuries also fell as the cost to insure U.S. and European investment-grade debt against default declined for the first day in four as speculation eased that hedge funds were seeking the contracts to protect them against trading losses.
The Dow Jones North American Investment Grade Index of credit-default swaps on 125 companies fell to 71 basis points, or $71,000 to insure $10 million of debt, from a two-year high yesterday of 75.5 basis points, ABN Amro Holding NV prices show. The equivalent ITraxx European index fell to 52.25 basis points from 53.80.
After the Retail Sales Report, BNP Paribas commented ``There is a persistent short position in the market,'' meaning a segment of investors betting debt prices will fall. That's preventing the market from going down.''
``Treasuries are still in demand,'' Akio Shimizu, a Treasury manager in Tokyo at Mitsubishi Trust & Banking Corp., a unit of Japan's second-largest lender by assets, said before the report. ``The flight to safety from corporate bonds is not over yet.'' Yields may fall to 4.1 percent in coming weeks, Shimizu said.
Treasuries also fell as the cost to insure U.S. and European investment-grade debt against default declined for the first day in four as speculation eased that hedge funds were seeking the contracts to protect them against trading losses.
The Dow Jones North American Investment Grade Index of credit-default swaps on 125 companies fell to 71 basis points, or $71,000 to insure $10 million of debt, from a two-year high yesterday of 75.5 basis points, ABN Amro Holding NV prices show. The equivalent ITraxx European index fell to 52.25 basis points from 53.80.
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