Interest Rate Roundup

Tuesday, November 27, 2007

Those wild and wacky bonds...

Who says stock traders have all the fun? Have you seen the craziness in the bond market these past couple of days? Yesterday's gigantic bond market rally is being followed up by a nasty sell-off today. The long bond futures were recently DOWN 1 18/32 in price (after finishing yesterday UP 1 29/32). Two-year yields, for their part, are soaring 18 basis points to 3.07% after dropping 19 basis points to 2.89% yesterday. Oh, and the dollar? After sinking to a new closing low yesterday, it's reversing to the upside today. Not a big move, but about 37 bps in the Dollar Index.

The catalyst for all these gyrations: The $7.5 billion capital injection into Citigroup from the state-owned Abu Dhabi Investment Authority. That has temporarily restored some confidence in the financial sector.


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