For better or for worse, the US Treasury comes to market this week with $118b worth of 2’s, 5’s and 7 year maturities. For better in that higher yields will bring out the buyers, for worse, a light week and the scare of higher yields will keep the buyer’s home, thus sending yields even higher. This comes as the yield spread between 2’s and 10’s is back at a record high of 285 bps as the bond market has begun the tightening process for the Fed and also adjusts to the ever deteriorating financials of the US government as 5 yr CDS trade near 6 month highs. The 2010 action in the stock market will be predominantly determined not by earnings (as the ’09 rally has priced in much of the rebound) but by interest rates. The 10 yr note yield today at 3.85% is matching the highest level since June. But for now, stocks continue their path of least resistance as the focus is on the improving global economic picture.
2010 stock action will be dictated by the bond market
December 28, 2009 8:17am by
This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client. References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. The Compound Media, Inc., an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers Please see disclosures here: https://ritholtzwealth.com/blog-disclosures/
Posted Under
UncategorizedPrevious Post
John Dugan: Architect of “Too Big to Fail” BanksNext Post
Government Housing Support (Update)
What's been said:
Discussions found on the web: