Treasuries were down all day but rallied from their lows to finish steeper for the ninth day in a row. The two-year finished the day down 1/64, and the ten-year was lower by 15/64. The benchmark curve was steeper by 3.5 basis points on the day, and currently sits at +224.5 basis points. A basis point represents .01%.Credit
April was a great month for Credit spreads. Yields on government guaranteed paper are up due to supply concerns while yields on corporate bonds have come down considerably. The graphs below compare CSJ (1-3 year Credit) and LQD (Intermediate Credit) to their respective treasury ETFs on a price basis. Remember prices move inversely to yields.
Corporates will essentially track equities (S&P 500 +9.4% for April), so this isn’t shocking by any means. But with all the talk about Treasuries taking it on the chin so hard because we haven’t seen any sign of “quantitative easing v2.0” from the Fed, I figured I would make a point of it.
Have a great evening.
Cliff J. Reynolds Jr., Junior Analyst
No comments:
Post a Comment