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Short term yields above long term in reinversion Original Source Link: (May no longer be active)    http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-03-22T145856Z_01_N22346400_RTRIDST_0_MARKETS-BONDS.XML http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-03-22T145856Z_01_N22346400_RTRIDST_0_MARKETS-BONDS.XML US Treasuries rise a day after Bernanke-led plunge Wed Mar 22, 2006 9:58 AM ET By Oliver Ludwig NEW YORK, March 22 (Reuters) - U.S. Treasury debt prices rebounded on Wednesday, a day after heavy selling led to the biggest one-day rise in short-dated yields since July. Traders said Wednesday's rise was a technical bounce-back from Tuesday's sell-off, which followed a rise in underlying producer inflation and economic optimism from Federal Reserve Chairman Ben Bernanke in a speech on Monday night. The result of Tuesday's action was a "re-inversion" of the yield curve, which again lifted short-term yields above long-term yields, as many in the bond market took Bernanke's optimism to mean that the Fed will raise official short-term interest rates at least two more times. "We are just reasserting the general trend, which is curve flattening. I don't think there's a whole lot more to it today," said Alan De Rose, a bond trader at CIBC World Markets in New York. Benchmark 10-year notes added 8/32 in price, pushing the yield down to 4.69 percent from 4.73 percent on Tuesday. Some analysts said 10-year note yields struggled technically to climb above 4.68 percent during Tuesday's sell-off and would probably struggle to push below the same level if prices bounce much higher on Wednesday. Two-year notes, the focus of most of Tuesday's move, added nearly 1/32 in price to yield 4.73 percent after ending the day on Tuesday at 4.74 percent. Two-year note yields remained 4 basis points above 10-year yields, where they ended on Tuesday. Five-year notes added 3/32 in price to yield 4.68 percent, compared with 4.70 percent on Tuesday. Thirty-year debt rose 19/32 for a yield of 4.71 percent, compared with 4.75 on Tuesday. Traders said action was considerably lighter on Wednesday, with the Mortgage Bankers Association's weekly mortgage market index the most notable -- if not the only -- data offering of the day. The bond market looked past the data. Given rising interest rates, it came as no surprise to analysts and traders that the index fell 1.6 percent to 565.0 as both the purchase and refinancing indexes dipped. Analysts were inclined to view the data much as Bernanke viewed the entire housing picture in the U.S. economy: that growth in the sector was clearly slowing, but not at a rapid enough rate to derail economic growth. "Both home buying and refinancing activity have deteriorated. Nevertheless, home buying remains at a relatively high level while the deterioration in refinancing activity is relatively slow," said Steven Wood, an economist at Insight Economics in Danville, California.

Billions in federal lands sold off { December 3 2007 } Budget deficit hits 374b { October 20 2003 } Buffett attacks america as rich spending junkies { March 7 2005 } Buffett makes billions betting against dollar { March 5 2005 } Bush presides over biggest spending since 1990 Cheney says deficits dont matter { January 12 2004 } China holds the mortgage to the dollar { August 31 2005 } China loses faith in dollar Congress approves 1tr debt { May 27 2003 } Debt near ceiling again { February 20 2003 } Fd chair blames long term rates on world savings glut { March 20 2006 } Federal deficit estimated almost another trillion { January 25 2005 } Financial crisis if foreign investors pull out { November 21 2005 } Foreign investors finance US debt by 2b a day Government borrows billion a day { October 8 2004 } Greenspan leaves us with record debt { January 23 2006 } Greenspan warns not to pay down debt { March 22 2001 } Raise debt limit Raises debt limit { June 27 2001 } Republicans raise debt limits to 9 trillion { March 17 2006 } Short term yields above long term in reinversion Snowballing debt awaits taxpayers { December 1 2003 } Treasury needs to raise 8 trillion debt limit { February 2006 } UN calls for asian help US deficits { January 26 2005 } US debt tops 9 trillion for first time { October 2007 } War spending drives record deficit estimate Whitehouse urges raise debt ceiling { May 20 2003 } Files Listed: 27

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