8/12/09

Today we have $23 billion of 10-yr notes to sell (tomorrow $15 billion of 30-yr bonds). It doesn’t hurt that Treasury buying by the central bank is helping to support the market. I am not smart enough to know how, if the US Government is both selling and buying securities, it helps rates. Most of today's focus is on the FOMC meeting, concluding at 2:15 with the very short policy statement. We wish the FOMC would have more info but it has always been an exercise in interpretation. The economy has improved faster than what the fed had expected at the last FOMC meeting but the Fed is not about to increase interest rates with little inflation and a recovery very fragile. Still jobs being lost and the residential housing market in shambles.
Interest rates will likely remain flat through the morning with the stock market still the overriding driver for the rate markets. The FOMC meeting and the 10 yr note auction should keep markets fairly quiet through the morning session. The stock market opened slightly better at 9:30 and is gaining a little ground at 10:00.