logo
  Join        Login             Stock Quote

Bonds Higher As Crude Jumps And Stocks Slide

 February 22, 2011 12:32 PM


Bond investors had emotions tugged both ways as a volatile Libyan situation drove safe-haven demand skyrocketing before hawkish commentary from an ECB member later dampened enthusiasm for government paper. Yields continue to remain towards the day?s lowest point, however, as enthusiasm for a stock market recovery becomes a distant memory.

Eurodollar futures – Yields on benchmark U.S. government debt fell to a two-week low, recovering more than 25 basis points from its highest point in 10-months. At one point on Tuesday the 10-year yield slumped to 3.49% as investors' fears over rising geopolitical tension were fuelled by a 10% jump in the price of crude oil. Libya is Africa's largest crude oil resource and its President Qaddafi appears to be adopting a scorched-earth policy before giving in to protesters demanding he hands over power. The March treasury note future jumped to a session high at 119-28 before sentiment was dashed by comments from a European central banker. Nevertheless the contract remains a half-point higher at 119-20 for a yield drop of five basis points on the day at 3.53%. Eurodollar futures have also pared an earlier surge but implied yields are still lower by six or so pips along the curve. Consumer confidence across the U.S. jumped to 70 and in excess of today's expected reading to register a gain from a January reading of 60. The threat from Libyan political meltdown stems not simply from rising Middle East tension, but rather the jump in crude prices has the ability to crimp the global recovery, which is also outweighing the inflationary implications at this point in time.

[Related -Initial Jobless Claims Rose Unexpectedly]

[Related -All Quiet on the Record High Front]

European bond markets - ECB governing council member Yves Mersch warned that the central bank might be forced to adjust monetary policy as inflationary pressures stare it in the face. He noted that there was an inevitability about the need to rebalance in light of a return to the central bank's 2% target ceiling. Discussion at the central bank must by now be pretty heated given the recent calm by its President Trichet and others who have moved to quell speculation that recent comments not be taken out of context. Mr. Trichet earlier noted that policy was set appropriately but now faces the rebuke of Mersch who says that his colleagues couldn't be faulted for reaching his same conclusion. German bunds rose with the March contract reaching 124.36 before gains were pared to 124.10. The yield fell to 3.16% despite an advance to a four-year high in a GfK consumer confidence reading for Germany. Italian consumer confidence also rose. In contrast to falling bond yields those at the short-end of the curve rose on comments from Mr.


Next Page >>12
iOnTheMarket Premium
Advertisement

Advertisement


Comments Closed


rss feed

Latest Stories

article imageInitial Jobless Claims Rose Unexpectedly

Claims unexpectedly rose in the latest report through last weekend to breach 300,000 for the first time read on...

article imageAll Quiet on the Record High Front

What can we glean from the media’s lack of attention to the market’s recent record read on...

article imageThe Chip Maker Short Sellers Should Be Watching

Investing in semiconductor stocks is always tricky. Industry cycles can lead to bumps in the road for the read on...

article imageChicago Fed: US Economic Growth Slowed In October

The pace of US growth slowed more than expected in October, according to this morning’s update of the read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.