Post last week’s Fed announcement the markets experienced 3 days of emotional, perhaps even a panic reaction as investors fled risk assets such as stocks, and dove into the relative safety of U.S. Treasuries. It seems after taking the weekend off, and receiving indications the Europeans may actually have the resolve to salvage the Euro, steadier nerves have replaced the panic. Investors, seeing cheaper stock prices, have piled in and sold Treasuries, pushing interest rates higher. The yield on the 10 year note hit a low of 1.74% last week and is now trading at 2.045%, and mortgage bonds have given back over 100 basis points in price.
This trend continues today, with investors pushing interest rates higher, even though stocks remain relatively flat.
Today’s Durable Goods report from the Commerce Department suggests some businesses are investing in capital equipment, as new orders for these items rose 1.1% after falling .02% in August. This data had little effect on the markets.
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