Bond prices suffered a significant setback and stocks put in a strong rally on Monday as the European Union seemed to finally be making progress in resolving its financial woes. The same story is the headline this morning; stocks are moving sharply higher and bonds struggle. The yield on the 10 year note is close to pushing above the 2.0% mark, with a current yield of 1.99%. In conjunction with the decline in Treasures, mortgage prices are worse by approximately .25%.
In terms of data, home values continue to sag as reported by the S&P/Case-Shiller index. The latest reading for this index reflects property values in the 20 cities measured declined 4.1% in the 12 months from July 2010.
Later today the U.S. Treasury will auction $35 billion of 2 year notes; the same maturity as the notes being sold by the Fed in their “operation twist” announced last week. This should be interesting to watch.
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