10 Year Yield: 5.043% April 13, 2006 11:45am by Barry Ritholtz For the first time since June of 2002, the 10-Year Bond Yield has a 5 handle on it:click for larger chart Spread the wealth. twitter facebook linkedin What's been said: Discussions found on the web: John Navin commented on Apr 13 The point and figure chart targets 5.9%. thecynic commented on Apr 13 some bizarre price action today.. any thoughts? emd commented on Apr 13 i expected more of a reation from equities. bear commented on Apr 13 quick run to 6%…. are you ready thecynic commented on Apr 13 and you have high beta leading the rally.. it could have been macro fund programs selling bonds and buying stocks but i don’t get piling into tech and small caps.. i can see that driving out performance in the Dow but not in NDX 100. once again we have a stock (INTC) rallying off a 52 wk low driving the whole market. GM did the same thing yesterday, AAPL last week. a market driven higher by short covering is not sustainable… these higher borrowing costs also make it more expensive to be short. i’m ready for a long weekend…… Emmanuel commented on Apr 13 I’d like to see trading after the Easter break. That many are away today might be exaggerating the movement. todd commented on Apr 13 cynic- you should not be paying interest on borrowed stock… what kind of shorts do you have rolling that you need to pay borrowing costs? I stay away from that stuff… hard to borrow = easy to squeeze. Anyway- higher interest rates will make it more expensive to be a leveraged bull. I think we’ll see an equities reaction to interest rates next week when the volume returns. You don’t want to sell big blocks into a lightly traded pre-holiday market. the 10-year yield is ON FIRE! I sure wouldn’t want to get in the way of it. GRL commented on Apr 13 Kohn speaks! http://www.federalreserve.gov/boarddocs/speeches/2006/20060413/default.htm My job as a policymaker is to work with my colleagues to identify the path of short-term interest rates that has the best chance of realizing that favorable central-tendency forecast of solid growth and continued low inflation. I do not know how much policy firming will be needed to accomplish this objective. My forecast is that the economy is in transition to a sustainable pace of growth, in which case policy likely will be in transition as well. At this juncture, given the apparent strength in demand and the narrowing margin of unused resources, I am focused on making sure that inflation and inflation expectations remain well anchored. A tendency for inflation to move higher would put economic stability and the long-term performance of the economy at risk. Accordingly, for me, the critical indicators in the time ahead will be the ones that signal whether growth is indeed likely to proceed at a sustainable pace and whether inflation remains on a favorable track. This is a judgment my colleagues and I will need to make meeting by meeting as the incoming information–both the data and, critically, the timely feel for developments that we get from the Reserve Banks’ contacts in the community–help us assess the paths for the economy and price pressures. dave commented on Apr 14 “…and whether inflation remains on a favorable track” If the fed intends to keep inflation on its current track then I think we’re going to have a problem. dave commented on Apr 14 “For the first time since June of 2002, the 10-Year Bond Yield has a 5 handle on it:” Is this because inflation is ‘well contained’, ‘contained’ or ‘well anchored’? Also, they focus a lot on core inflation — which is fine, but why can’t they give us an update on what they see happening with ‘non-core’ prices? How do the seers judge the direction of non-core prices? Contained or not-so contained? I have my opinion, but considering non-core prices have to be paid as regularly as core prices, why does the fed continue to ignore the big round thing in the corner (long nose and floppy ears) todd commented on Apr 14 Here’s a great explanation… billions of dollars in bonds are being sold off to pay for taxes! LOL from the New York Times: But one analyst noted that at least a part of the increase in Treasury yields during the last couple of weeks may prove to be a temporary phenomenon. The yield on Treasury notes have consistently risen in the weeks before the April 15 tax deadline, presumably because Americans are selling notes and bonds to pay off their tax bill, according to an analysis of 40 years of data by Carl D. Steen, a market analyst at MFR Inc., a research firm based in New York. http://www.nytimes.com/2006/04/13/business/13cnd-bond.html Read this next.August 31, 2005 3 and 2 year yield curve inversionJanuary 26, 2007 Falling Bonds, Rising YieldsNovember 15, 2006 U.S. Treasury Yield Curve Posted Under Fixed Income/Interest Rates Inflation Previous Post We’re Expecting Stocks to Rally Next Post Will the US Economy Decelerate Rapidly as Boomers Retire?