Fixed Income Close
Bonds were firm today as Q1 drew to a close, rallying early on write-down concerns at UBS and Northern Rock and opening weakness in equities. Even as equities rebounded later in the morning on firmer Chicago-PMI and financials catching a bid, safe-haven flows held Treasury yields down.
The regulatory overhaul proposed today by TSY Secretary Hank Paulson yielded little market impact, as the plans are far-reaching and would take years — plus a lot of political compromise — to implement.
The 30yr is up 12 ticks, yielding 4.295%, while the 10yr is up 5 at 3.421% and the 2yr is 2 ticks higher to yield 1.606%. The 2-10yr spread is just over 181bps, marking a slightly steepened curve compared to Friday’s.
On the short end, the 4wk bill is down 9 ticks today to yield 1.18%. The 3-month lost 6 to yield 1.31% and the 6-month is down 3 at 1.48%. FED Fund futures are still about evenly split between a 25bp and 50bp rate cut on April 30.