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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (64580)	6/26/2006 12:42:26 PM
From: mishedlo	Respond to of 110194

they will break that line if for no other reason than to get the shorts all lathered up Mish

To: John Vosilla who wrote (64580)	6/26/2006 1:20:17 PM
From: redfrecknj	Read Replies (1) \| Respond to of 110194

Seems broken:

To: John Vosilla who wrote (64580)	6/26/2006 3:41:24 PM
From: gregor_us	Read Replies (1) \| Respond to of 110194

Treasury 10-Year Notes Fall a 9th Day, Longest Slump Since 1974 June 26 (Bloomberg) -- U.S. Treasury 10-year notes fell a ninth consecutive day, the longest slump since 1974, as the prospect of a 17th straight interest-rate increase by the Federal Reserve this week prompted investors to demand higher returns. The 10-year note's yield rose almost 2 basis points, or 0.02 percentage point, to a more than four-year high of 5.24 percent as a stronger-than-expected report on new home sales challenged the view the economy is slowing. Yields on two- and five-year notes are the highest since December 2000 before this week's auctions of the securities. ``Market psychology is reaching an extreme,'' said Paul McCrae Montgomery, president of Montgomery Capital Management LLC in Newport News, Virginia, who has followed the market since 1971. ``We are in a long-term bear market, so any rally is going to be a matter of weeks, not months.'' Yields move inversely to prices. The price of the 5 1/8 percent note due in May 2016 fell 1/8, or $1.25 per $1,000 face value, to 99 3/32, at 3:11 p.m. in New York, according to bond broker Cantor Fitzgerald LP. Treasuries fell 11 consecutive days in April 1974, according to data compiled by Bloomberg and the Federal Reserve. President Richard M. Nixon was battling a House Judiciary Committee that month over control of tape recordings of conversations and telephone calls made in his office. Nixon resigned over the Watergate scandal in August 1974. `Sturm And Drang' Treasuries may continue to fall until the Fed meeting on interest rates starting June 28 and ending June 29, Montgomery said. While that event may trigger a rally, it's unlikely to match the one that started in May 1984, when 10-year notes fell eight straight days and yielded about 14 percent. ``Today's bond market does not have any of the sturm und drang that accompanied the historical May 1984 market reversal,'' which Montgomery in a report today called ``the second greatest buying opportunity for Treasuries in history'' after October 1981. The current losing streak has pushed the 10-year note's yield up 28 basis points from 4.96 percent on June 13. In May 1984 the yield rose 48 basis points in eight days, and in April 1974 it rose 24 basis points in 11 days to 7.66 percent. Two-year Treasury notes, whose yields are more sensitive than those on longer-maturity debt to changes in the Fed's rate, also fell for a ninth day. The yield rose less than a basis point to 5.25 percent, the highest since December 2000. Aggressive Fed Ten-year yields have been lower than two-year yields since June 8, reflecting the expectation that Fed rate increases will slow economic growth and inflation. ``A very aggressive Fed's been priced into the market already,'' said Vincent Boberski, senior vice president of portfolio strategies at FTN Financial in Chicago. ``What we're going to see are signs of a slowdown in housing and the broader economy.'' The Fed has lifted its target rate for the overnight lending rate between banks from 1 percent in June 2004 to the highest in more than five years. Interest-rate futures show traders are certain policy makers will increase rates by a quarter percentage point when the Federal Open Market Committee, or FOMC, meets on June 29. The odds of a 5.5 percent rate at the August meeting are about 88 percent. New home sales increased 4.6 percent to an annual rate of 1.234 million from a pace of 1.180 million in April that was lower than previously reported, the Commerce Department said today. The pace is down from a record 1.367 million in July as mortgage rates have risen. Declines in Treasuries were limited as the report also showed builders cut prices and offered incentives to boost sales. Builders cut the median price of a new home to $235,300, the lowest since July. Builders also are offering incentives such as country club memberships and luxury car leases. Existing Home Sales An industry report on existing home sales, which account for more than 80 percent of sales, tomorrow is forecast to show the pace of sales slowed to 6.61 million in May from 6.76 million in April, according to the median forecast in a Bloomberg survey. Fed officials including Chairman Ben Bernanke have said housing is at risk of slowing more than expected, posing a threat to the broader economy. ``The market's not going to move much till we see Thursday's FOMC statement,'' said Richard Gilhooly, a director in fixed- income strategy at BNP Paribas Securities Corp. in New York. ``That's why you're not seeing much reaction to this data.'' The government, which sells new two- and five-year Treasuries monthly, sell $22 billion of two-year notes tomorrow and $14 billion of five-year securities the next day. In pre-auction trading the two-year notes yielded 5.25 percent and the five-year notes yielded 5.21 percent. The securities haven't been auctioned at higher yields since November 2000.