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Today’s Market Color
12/27/2010
The People’s Bank of China raised the one-year lending rate by 25bps to slow down inflation; global equities are down and US Treasuries are lower. The Treasury is scheduled to auction $35B of 2yr notes today, $35B of 5yr notes tomorrow, and $29B of 7yr notes on Wednesday. Right now, the futures market is pricing in an 85% chance that the Fed keeps rates between 0% and 0.25% through April 27th, 2011. Currently, the Ten Year yield is at 3.40% (3.37% on Thursday) and the 2-10 yield spread is at 270bps, flattening 2bps since Thursday morning.
