..and who said bonds gonna drop BIG TIME?

Winetalk.com · 04-02-2004

Treasury yields close at two-month highs
Friday, April 2, 2004 3:56 PM
- CBS MarketWatch.com
By Gregory Robb, CBS Marketwatch.com
Last Update: 3:56 PM ET Apr 2, 2004

WASHINGTON (CBS.MW) -- Treasury prices closed at two-month highs after the U.S. March unemployment data was much stronger than anticipated, raising the likelihood that the Federal Reserve will raise interest rates sooner rather than later.

Kevin Giddis, managing director of fixed income at Morgan Keegan & Company, said the strong employment report "is making the bond market sick to its stomach."

U.S. nonfarm payroll employment grew by its fastest rate in four years in March, rising by 308,000. See full story.

The increase was more than double expectations. The consensus forecast of Wall Street economists was for payroll growth of 122,000 in March.

"The report is pretty overwhelming. The clear reading here is things were better than we thought and are better than we expected," said Russ Sheldon, economist at BMO Nesbitt Burns in Toronto.

The benchmark 10-year Treasury note ($TNX) fell 2 1/16 points at 98 27/32. Its yield jumped to 4.14 percent vs. 3.89 percent at the previous U.S. close. This is the biggest rise in yields since last July.

This would be the highest close since Feb. 5, the day before the weak January jobs report cast doubt on the strength of the recovery.

"The bond market is clearly beating a hasty retreat as it ought to," said Robert Brusca, chief economist at Fact and Opinion Economics.

"We have enough economic growth and now we have job growth and we have flaring commodity prices. We are in a land where if job growth persists the Fed will have no mileage out of keeping rates steady. That is what the bond market can see," Brusca said.

"The markets view this as an all-clear signal that the economy is firing on all cylinders," Sheldon said.

Bill Tedford, fixed income strategist with Stephens Capital Management in Little Rock, Ark., said the bull market is over for bonds.

"It has been a long time coming, but I suspect this is the beginning of a march upward in interest rates that is going to go on for a good while," Tedford said.

Other analysts said it was still too early to buy the bull market.

"U.S. 10-yr note yields...have yet to confirm significantly higher yields ahead," said David Solin, partner at Foreign Exchange Analystics.

"I would keep a strong watch on the 4.20 to 4.25 area on the 10-year. If we move above there it is going to be a very bearish technical signal," said Josh Stiles, bond analyst at IDEAGlobal.

Stiles said he expected yields to get there eventually, though it might take another strong job report or a hawkish Fed speech to push the market to that level.

The 30-year bond ($TYX) plunged 2 3/4 to 105 26/32, yielding 4.98 percent vs. 4.80 percent.

The 2-year note slipped 7/16 at 99 10/32 to yield 1.86 percent vs. 1.62 percent. This is a rise of 24 basis points, the largest increase since December 2001.

Sheldon said the strong report would not cause the Federal Reserve to quickly raise short-term interest rates.

"It was what they expected. [Alan] Greenspan said last month that employment would pop," he said.

"They [the Fed] will want several months of job growth. If we get a string of 300,000 increases -- then they will tighten monetary policy," Sheldon added.

Brusca said the bond market was "still a kind of treacherous place to be" because Japan may resume intervening to support the yen. "It would be a mistake to conclude that the Bank of Japan is out of the picture," Brusca said.

Japanese demand for bonds, which officials buy using the proceeds of currency intervention, has been a key driver of higher bond prices and lower yields over the past several months.

Greg Robb is a senior reporter for CBS MarketWatch based in Washington

Winetalk.com · 04-02-2004

I gotta go out more often...being out for 2 weeks was my BEST 2 weeks financially...and I don't even count 19 sold 50% Oprano shares
;_))))

Mike AI · 04-02-2004

So I should have liquidated my ACG posistions?

Winetalk.com · 04-02-2004

Quote:

Originally posted by Mike AI@Apr 2 2004, 05:30 PM
So I should have liquidated my ACG posistions?

why????
they have lots of junk/3rd worl debt,
pay high coupons,
keep 'em, ACG is still better than Money Market,
IMHO.

I will buy more PHK on weakness

Winetalk.com · 04-02-2004

but as far as TRADING is concerend,
2 days ago it was a good sell to pick it at much better price after the first Fed raise

Mike AI · 04-02-2004

Quote:

Originally posted by Serge_Oprano@Apr 2 2004, 05:35 PM
but as far as TRADING is concerend,
2 days ago it was a good sell to pick it at much better price after the first Fed raise

OK - Just making sure we are on same page.

Winetalk.com · 04-02-2004

BTW, I put my money where my mouth is,
since the begining of the year I liqidated:

Corp Bonds : $120,000
Gov Bonds/FNMA : $175,000
CD's : $185,000

and put it all in the SHORT BOND position when I posted back in a day

theduderocks · 04-02-2004

Quote:

Originally posted by Serge_Oprano@Apr 2 2004, 02:39 PM
BTW, I put my money where my mouth is,
since the begining of the year I liqidated:

Corp Bonds : $120,000
Gov Bonds/FNMA : $175,000
CD's : $185,000

and put it all in the SHORT BOND position when I posted back in a day

How nice for you Serge.

masterp74 · 04-02-2004

Quote:

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04-02-2004	#1
Winetalk.com Prostate Examiner I quoff fine wine at corkd.com Join Date: Oct 2002 Location: good 'ole USA Posts: 21,018	Treasury yields close at two-month highs Friday, April 2, 2004 3:56 PM - CBS MarketWatch.com By Gregory Robb, CBS Marketwatch.com Last Update: 3:56 PM ET Apr 2, 2004 WASHINGTON (CBS.MW) -- Treasury prices closed at two-month highs after the U.S. March unemployment data was much stronger than anticipated, raising the likelihood that the Federal Reserve will raise interest rates sooner rather than later. Kevin Giddis, managing director of fixed income at Morgan Keegan & Company, said the strong employment report "is making the bond market sick to its stomach." U.S. nonfarm payroll employment grew by its fastest rate in four years in March, rising by 308,000. See full story. The increase was more than double expectations. The consensus forecast of Wall Street economists was for payroll growth of 122,000 in March. "The report is pretty overwhelming. The clear reading here is things were better than we thought and are better than we expected," said Russ Sheldon, economist at BMO Nesbitt Burns in Toronto. The benchmark 10-year Treasury note ($TNX) fell 2 1/16 points at 98 27/32. Its yield jumped to 4.14 percent vs. 3.89 percent at the previous U.S. close. This is the biggest rise in yields since last July. This would be the highest close since Feb. 5, the day before the weak January jobs report cast doubt on the strength of the recovery. "The bond market is clearly beating a hasty retreat as it ought to," said Robert Brusca, chief economist at Fact and Opinion Economics. "We have enough economic growth and now we have job growth and we have flaring commodity prices. We are in a land where if job growth persists the Fed will have no mileage out of keeping rates steady. That is what the bond market can see," Brusca said. "The markets view this as an all-clear signal that the economy is firing on all cylinders," Sheldon said. Bill Tedford, fixed income strategist with Stephens Capital Management in Little Rock, Ark., said the bull market is over for bonds. "It has been a long time coming, but I suspect this is the beginning of a march upward in interest rates that is going to go on for a good while," Tedford said. Other analysts said it was still too early to buy the bull market. "U.S. 10-yr note yields...have yet to confirm significantly higher yields ahead," said David Solin, partner at Foreign Exchange Analystics. "I would keep a strong watch on the 4.20 to 4.25 area on the 10-year. If we move above there it is going to be a very bearish technical signal," said Josh Stiles, bond analyst at IDEAGlobal. Stiles said he expected yields to get there eventually, though it might take another strong job report or a hawkish Fed speech to push the market to that level. The 30-year bond ($TYX) plunged 2 3/4 to 105 26/32, yielding 4.98 percent vs. 4.80 percent. The 2-year note slipped 7/16 at 99 10/32 to yield 1.86 percent vs. 1.62 percent. This is a rise of 24 basis points, the largest increase since December 2001. Sheldon said the strong report would not cause the Federal Reserve to quickly raise short-term interest rates. "It was what they expected. [Alan] Greenspan said last month that employment would pop," he said. "They [the Fed] will want several months of job growth. If we get a string of 300,000 increases -- then they will tighten monetary policy," Sheldon added. Brusca said the bond market was "still a kind of treacherous place to be" because Japan may resume intervening to support the yen. "It would be a mistake to conclude that the Bank of Japan is out of the picture," Brusca said. Japanese demand for bonds, which officials buy using the proceeds of currency intervention, has been a key driver of higher bond prices and lower yields over the past several months. Greg Robb is a senior reporter for CBS MarketWatch based in Washington __________________ why dogs sniff each other butts?

04-02-2004	#2
Winetalk.com Prostate Examiner I quoff fine wine at corkd.com Join Date: Oct 2002 Location: good 'ole USA Posts: 21,018	I gotta go out more often...being out for 2 weeks was my BEST 2 weeks financially...and I don't even count 19 sold 50% Oprano shares ;_)))) __________________ why dogs sniff each other butts?

04-02-2004	#3
Mike AI Administrator Want to see your own Advertising Here! Join Date: Oct 2002 Posts: 11,618	So I should have liquidated my ACG posistions? __________________ Make big money on your Domains! Why wait 40 days to get paid with the other guys? Parked.com pays the most for your traffic, and cuts checks twice a month!

04-02-2004	#5
Winetalk.com Prostate Examiner I quoff fine wine at corkd.com Join Date: Oct 2002 Location: good 'ole USA Posts: 21,018	but as far as TRADING is concerend, 2 days ago it was a good sell to pick it at much better price after the first Fed raise __________________ why dogs sniff each other butts?

04-02-2004	#7
Winetalk.com Prostate Examiner I quoff fine wine at corkd.com Join Date: Oct 2002 Location: good 'ole USA Posts: 21,018	BTW, I put my money where my mouth is, since the begining of the year I liqidated: Corp Bonds : $120,000 Gov Bonds/FNMA : $175,000 CD's : $185,000 and put it all in the SHORT BOND position when I posted back in a day __________________ why dogs sniff each other butts?