This morning’s improvement in bond prices is directly attributable once again to the uncertainty of an EU/IMF bailout of Greece. That potential crisis as well as the much anticipated testimony of Goldman Sachs executives to congress will capture today’s headlines.
Don’t forget the U.S. Treasury is auctioning a record amount of debt this week, beginning today with $11 billion of 5 yr TIPS, followed by $44 billion of 2 yr notes on Tuesday, $42 billion of 5 year notes on Wednesday, and $32 billion of 7 year notes on Thursday.
The Federal Open Market Committee (FOMC) will begin a two day meeting tomorrow to discuss interest rate policy and economic activity. CNBC reported Friday there may be at least six FOMC members interested in selling assets as well as eliminating the “extended period” language, which references how long the Fed will keep the Fed funds rate at .25%. The Fed’s policy statement will be delivered at the close of the meeting on Wednesday, usually at 2:00 PM, ET.
Given the opposing forces pushing on interest rates you can expect increase volatility this week. A resolution to the Greek debt crisis and any significant policy change by the Fed will have a negative affect on interest rates—especially given the new supply coming to market.
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