Bond prices are lower this morning with the ten-year treasury’s price falling for the sixth straight day, pushing its yield up to nearly 2.70%. This is above the level at which it traded when Fed Chairman Bernanke spoke in Jackson Hole, WY about the options the Fed has to combat deflation and provide further "unconventional" accommodation. Expectations for QE2 have steadily built; however, this morning’s WSJ contains yet another article on the subject, saying the Fed "is likely to unveil a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months." Such a move would fall on the light-end of market estimates, which will most likely push interest rates higher.
This morning it was reported durable goods orders for September rose 3.3%, beating estimates, but having little effect on the bond or stock markets.
Tuesday’s two-year auction found strong demand, and today, the Treasury will auction five-year notes. Mortgage pricing is .125% to .250% worse than Tuesday.
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