Market Observations 05/28/09

The gap between 2 yr and 10 yr Treasuries narrowed to 272 basis points from a record 276 basis points yesterday.

The yield on 10 yr note went five basis points lower to 3.68%; 10 yr yields increased 19 basis points yesterday. The 2 yr yield is now at 0.97%.

Yields on Fannie Mae’s current-coupon 30 yr fixed rate mortgage bonds climbed to 4.69% yesterday

European and Japanese government bonds fell, after Treasuries had their biggest rout in four months yesterday...

on concern central bank efforts to revive the global economy by driving down borrowing costs are failing.

Yields on German bunds rose five basis points to 3.68%, while the yield on Japanese 10 yr bonds climbed as much as three basis points to 1.5%.

Gold traded at $950; crude oil at $62; sending petrol back over $2.50 per gallon. Rising commodities along with rising rates will kill this bear rally.

The Nattering One muses... Do not be fooled.

The jump in share prices of the past two months is a bear market rally, not the start of a genuine recovery.

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