Thursday, March 25, 2010

Jitters in the Bond Market

On March 24th Bloomberg reported that Treasuries, the euro, stocks and commodities slid as a downgrade of Portugal’s debt and weaker- than-forecast demand in a U.S. bond auction added to concern governments will struggle to fund swelling deficits. Chatter like this is nothing new on Wall Street since the markets have had a plethora of issues to create a wall of worry for the equity markets to climb. The chart below shows the yields on the 10 Year Treasuries.
It will be interesting to see the reaction of markets if rates begin to rise further, but, more importantly, what Wall Street's reaction will be if and when the monetary base begins to shrink in America.

Click chart for larger image.

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