We are getting hit with an enormous amount of supply. That is having an exaggerated influence.
There are some receiving demand on the back of the supply.
We deem this action representative of a market that has lost the flurry of last week's panic buying and instead is rethinking its view as to the near-term motivation of the Fed and the impact of Katrina.
We're anxious fence-sitters. Yields are back to where we like them -- and we'll like them more if we see more buyers and improved price action.
We've seen dip buying and think that's a precursor to larger commitment into supply.
Given this is a swan song for Greenspan, I think it's going to be one more of these global topics. There will be very little if anything that will give us any insight into monetary policy.
Today is about positions unwinding and we should not confuse price action with new, fundamental, information. When unwinds of magnitude take place, they have an endgame -- those positions will square and/or strong hands will dominate.
It is going to follow what the nominal (Treasury) curve is doing. It's not that great of a surprise.
While the curve has moved to flat as a pancake to a bit inverted and yields open the year near 4.38%, we are not excited about further inversion just yet.
Without the benefit of data or issuance, the impetus to extend those gains is limited.
Without more critical information, people are not going to be willing to push it. I don't think the market has been short enough or bullish enough to push this rally further.
We cannot take solace from these figures as the upward revision to the core PCE deflator takes the year-on-year rate to 1.9 percent, up against the Fed's outer boundary.
Does anyone seem impressed that tens got to 4.99 percent and failed to print a 5 percent handle? Apparently not. There was hardly a momentum rejection, rather a yawn.
Corporate issuance will continue to be a major factor (in the Treasury market) in the weeks ahead with estimates ranging from $40 billion to $60 billion over the next month.
These are ugly numbers for bonds. I have been calling for 10-year yields to move back above 4.6 percent.
The suspiciously absent real money buyers, that were expected to step in and buy as yields backed up, have finally emerged -- supporting our view that we are near a temporary floor.
The suggestions provide framework of how to change our culture. We are going through semester plans and are trying to figure out how to use the suggestions.
This is big news. People sort-of thought it was inevitable, but it's still come sooner than many expected.
It's not that the market is bullish, it's that it stopped being bearish.
The market was bid before this report, but we do cite the decline and downward revision as more supportive data.
The market's saunter into 2006 continues, with just a few remaining events before the champagne and confetti. We have turned our focus to the first week of '06 -- in which we will see official Fed commentary, the employment report, and the market's return to full force.
The legacy of this week will be of a market that's cracked even before it gets the weight of supply and anticipated strong January data.