12:00 pm : Treasuries have rallied to their best levels of the session ahead of this afternoon's $35 bln 2-yr note auction. Buying picked up following the disappointing S&P/Case Shiller reading and continued after consumer confidence and new home sales posted mixed results. The tone of trade has been somewhat positive considering the U.S. is just one week away from defaulting if the debt ceiling is not raised. Longer dated paper is seeing the heaviest interest as a gain of 0.7% in the 30-yr has its yield down 6 bps at 4.261%. The 10-yr has slipped back below 3.00% and now finds itself on its session low near 2.95%. Some serious flattening has taken place along the yield curve with the 2-10-yr spread tightening to 256.6 from its previous 261.5.
What does a flattening yield curve tell you? Watch what happens to it should we do the voluntary default funky chicken dance.
One might take a look at the credit rating agencies' 'smart' downgrades of Japan and how that had such an enormous impact (not!) on that nation's currency and interest rates. One might also take a look at how 'smart' these guys were on their sub-prime mortgage calls before the 2008 meltdown.
I wonder if Big Ben even notices these pissants.
Just to put things in a perspective that isn't often voiced - did you know that the net worth of the US government is estimated to be between $400-450 trillion? $14 trillion is in the rounding error.
Edited by salsabob, 26 July 2011 - 11:49 AM.
John Galt shrugged, outsourced to Red China and opened a hedge fund for unregulated securitized credit derivatives.
If the world didn't suck, wouldn't we all just fly off?
