Thursday, September 11, 2008

US Treasury Notes & Bonds (2s, 10s, 30s), 10 Yr TIPS Spread Update

Due to the market chaos there seems to be a flight to quality in the treasuries. Now traders are even talking about a possible rate cut with commodities coming down, dropping the commodity inflation scare from the FEDs mind. I think there needs be a big flush to the downside to wash out all of the negative sentiment in order to restore the equity market. I wish there was some sort of debt liquidation price chart due to all of the reorganizations and huge bank debt blocks exchanging hands at distressed levels. I feel once this chart bottoms out the markets will be ready to move higher. I could only imagine the low ball bids being offered for Lehman's Neuberger Berman unit and it's commercial real estate portfolio due to the health of the market. It's pretty scary that these huge banking institutions are selling distressed assets to survive when they should be the ones providing capital to the private market and citizens. The billionaire funds better step into this market or there will be continued write downs as lending stays tight and our economy drags down the global economy.

I'm also wondering if the Bear Stearns, Fannie, Freddie and Lehman stories are the last to be told. The general economy could be the next story, but once the Lehman news of an asset sale, takeover, or government bailout comes out that could be the final flush or bottom. However if the economy's downside strength outweighs these large corporate restructuring catalysts it could take longer than expected. I've enclosed charts along with technical analysis of the U.S. Treasuries (source:, Yield Curve (source: as well as the 10 Yr TIP spread (source:

2 Yr Note Historical Chart

10 Yr Note Historical Chart>

30 Yr Bond Historical Chart

10 Yr TIPS Spread