The benchmark 10 yr auction was mediocre and the two day spike in interest rates didn’t excite many. The when issued was a touch above the when issued and the bid to cover of 2.92 was slightly below the 12 month average of 3.07 and the 2nd lowest since Feb. Post results, 10 yr treasuries are bouncing a touch but that is more due to its extreme weakness going into the auction rather than any strength in it. In light of this big spike in rates of late, the $64k question for stocks is what level of interest rates matter both in terms of impacting valuations due to the rising risk free rate and in affecting US economic activity. Yes, rates are still very low but because of our economy’s drug like dependency on cheap money, a sharp move of any kind will likely matter.
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