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Strategies & Market Trends : John Pitera's Market Laboratory
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To: John Madarasz who wrote (5294)12/17/2001 4:08:59 PM
From: John Pitera  Read Replies (1) of 33421
 
John, here's nice snippet that highlights how the 10 year swap spreads have expanded 20 basis points over the
past month, and the entire yield curve is moving up in yield / down in price. the 10 Year note and TBond made highs in yield for the move today.

The downtrend line on the 10 year note yield is long gone...we're way above it at 5.27, we were almost up to
5.40 earlier today

this chart a couple of weeks old but you can see how those downtrend lines are gone, here near 5.30

johnpsmarketlab.netfirms.com

(oh and also a Demand mention that is sure to interest Mrs. Peel.... our resident Demand Maven) -g-

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Patience may be a virtue when it comes to the Treasury market, as we would argue that the recent backup in yields is likely to fit nicely into our quality of recovery concerns. In other words, higher yields will raise the corporate debt servicing burden (10-year swap spreads have widened by more than 20 bp in just over the last month) a time when the capex to internal funds ratio is still over 120%. This dynamic should accelerate the corporate restructuring process, further weighing on the capital spending necessary to facilitate the structural gains in productivity, while also exacerbating the need to pare external manufacturing capacity to match a lower US demand profile.
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