Treasuries Trade Lower
After three straight days of strong rallying in stocks, the flight to quality trade had a bit of a reversal on the first trading day of 2009. In late trading the two-year was down 6 ticks to yield .86% and the ten-year traded almost two points lower to yield 2.4%. A tick represents 1/32 of one percentage point of a bond’s price.
Attention turns to supply next week when the Treasury plans to auction another $30 billion of three-year and $16 billion of ten-year notes. Most trading desks will be back to full strength next week, as a result we look for liquidity to improve. If investors fail to absorb the new auction supply don’t be surprised to see a real jump in yields come Wednesday and Thursday. On the other hand, the employment numbers that are planned to be released on Friday could disappoint, and bring back the flight to safety trade.
Cliff J. Reynolds Jr.
Junior Analyst
Monday, January 5, 2009
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