Interest Rate Roundup

Thursday, May 22, 2008

10-year yields moving higher; TIPS spread widening out

There's some interesting bond market action worth noting today: The yield on the benchmark 10-year Treasury Note is pushing the top end of its recent range, recently at 3.92%. We've also seen the 10-year TIPS spread widen out. It's the difference between yields on nominal 10-year Treasury Notes and yields on 10-year Treasury Inflation Protected Securities, and it's a key market-based indicator of inflation concern. The spread was recently just above 256 basis points, the highest going all the way back to August 2006. I continue to believe that a sharp break in bond prices (and a sharp rise in interest rates) is a key risk going forward.

UPDATE: Treasuries continue to sell off late in the day, with 10-year yields pushing 3.94% at last count. Meanwhile, I had a chance to check out Bill Gross' latest commentary, which is focused on the striking difference between our CPI figures and the inflation figures being reported around the world. It's nothing new to see bureaucrats get savaged about the accuracy of CPI data -- data that doesn't really reflect what we as Americans see in our daily lives. But it's notable to see this kind of critique coming from a guy who oversees the world's largest bond investment firm.


  • Why would investors leave bonds and go into stocks at this time? Assume the stock market isn;t going anywhere. This I don't understand.

    By Anonymous Anonymous, at May 22, 2008 at 7:33 PM  

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