To: mishedlo who wrote (26005 ) 2/8/2005 12:39:24 PM From: russwinter Respond to Breifing.com 11:59AM The curve has seen the 2-10- and 2-30-yr yield spreads back to levels last seen in Mar 2001. With the 30-years climbing in price session after session one bond veteran remarked, "Why the treasury doesn't reopen the 30-yr at these rates and issue just $100B is beyond me." Highlighting afternoon trading will be the $22B in brand new 3-year notes, which will likely draw decent demand given its scarcity (issued quarterly instead of monthly). Indirect bidder participation, foreign demand, will grab the headlines (for more please see our Bond Market Update comment at 11:55ET), particularly in an environment where the Fed is raising rates and the 3-yr yield sits at levels not seen since the summer of 2002. The Nov 3-year auction saw indirect bidders grab 53.6% of total, so a significant drop this time around will most likely keep the historical average above 35%. The dollar continues to hold gains, boosted on optimism emanating from both Fed Chair Greenspan and the budget proposal that the SU deficit situation will be drastically improved. The 10-yrs are currently +05/32nds yielding 4.029% while 30-yrs are +24/32nds yielding 4.377%.
