2-Year/10-Year Treasury Spread Hits All-Time Record

Bloomberg:

The gap in yield between Treasury 2- and 10-year notes, known as the yield curve, steepened to a record as reports showed that Philadelphia region manufacturing and U.S. leading indicators rose.
The Treasury Department said it will sell $126 billion in notes and bonds next week: billion in 30-year Treasury Inflation Protected Securities, or TIPS, $44 billion in two-year debt, $42 billion in five-year notes and $32 billion in seven-year securities on successive days beginning Feb. 22. The producer price index rose more than forecast last month.
“The steep yield curve is starting to reflect signs of stagflation,” said Michael Franzese, managing director and head of Treasury trading at Wunderlich Securities in New York. “The short end will remain tied to the Fed funds. Yet we are seeing inflation signs and as a result, long dated maturities are getting hurt.”
The yield curve increased to 2.92 percentage points, beating the record of 2.90 percentage points set on Jan. 11.
The 10-year note yield advanced five basis points, or 0.05 percentage point, to 3.78 percent, the highest level since Jan. 14, at 11:13 a.m. in New York, according to BGCantor Market Data. The two-year note yield rose two basis points to 0.86 percent.

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(HT: Alea)

Posted by on February 18th, 2010 at 1:03 pm


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