Tuesday, November 10, 2009

Will The US Bond Market Continue To See The Kindness of Strangers?

Not a lot of major news this morning, other than a few earnings announcements. Priceline.com (PCLN) was the standout that I saw. The company trounced estimates by 53 cents, and its stock is spiking +17% this morning to new highs. AIG is also getting a boost from comments by Moody's that the financial giant will be able to repay its Federal Reserve credit line and much or all of the Treasury's investment if financial markets continue to stabilize.

I find it amazing that the general public is more up in arms about Goldman Sachs (GS), who regained its financial footing first, and repayed the TARP investment netting the govt. a 23% return on its investment. Would you rather the other banks follow the lead of GS or AIG?

The big event for today will be the $25 billion auction of 10-year Notes. The bears have been saying all year that foreigners are unlikely to continue to buy US debt, which will cause bond yields to soar. To date, this has not been the case. All of the bond auctions lately have been extremely well received, and the indirect bidding (foreign buyers) has been higher than expected for most of the auctions. It will be interesting to see if this trend continues for today's important auction.

The dollar is roughly flat today, as are most commodities. Oil prices are near $79.45, while gold is up slightly again to $1103.

European and Asian markets were higher overnight. Fitch said Britain is the most at risk among big economies to lose its AAA rating, of course British officials came out to downplay the risk.

The 10-year yield is lower to 3.44%; and the VIX is slightly lower to 23.05


At 1:57 AM, Blogger Parag said...

The fact that most of the world's trade and finances is denominated in U.S. dollars has greatly assisted the U.S. in playing this shell game much, much longer than almost all observers thought it could.
U.S bond market


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