Treasury prices rose on Monday as investors took advantage of the still attractive yields, particularly on intermediate and long maturities, which continue to produce wider-than-average spreads compared to short term maturities. Just to cite an example, the 20-year historical 3Mo T-Bill / 30-year US Treasury spread is 215 bps; it is currently 452 basis points. Therefore market participants will continue to find value by extending out on the curve. By the end of the day the 2 year note gained a marginal 1/32 to yield 1.03% while the 5 year note rose 5/32, yielding 2.59%. The benchmark 10-year note rose 11/32 to yield 3.84% while the long bond gained 21/32 to yield 4.70%.
Treasury prices are higher this morning as the Commerce Department announced that the trade imbalance increased for the month of February. The 2-year note has gained another 1/32 yielding 1.01% while the 5 year note is trading 6/32 higher to yield 2.54%. The benchmark 10-year has increased 9/32 to yield 3.81% while the long bond has moved 15/32 higher to yield 4.67%. The Commerce Department announced that the trade gap between imports and exports continued to widen for February; while total exports reached $143.17 billion, a 0.20% MoM increase, it was still $39.70 billion short of total imports. Analysts had expected a smaller deficit of $38.5 billion. This difference was due to the fact that the change in exports was no match for the 1.70% increase in MoM imports which reached $182.88 billion in the same period. The previous month’s deficit was revised marginally lower at $37.0 billion from $37.3 billion.
Treasury prices are higher this morning as the Commerce Department announced that the trade imbalance increased for the month of February. The 2-year note has gained another 1/32 yielding 1.01% while the 5 year note is trading 6/32 higher to yield 2.54%. The benchmark 10-year has increased 9/32 to yield 3.81% while the long bond has moved 15/32 higher to yield 4.67%. The Commerce Department announced that the trade gap between imports and exports continued to widen for February; while total exports reached $143.17 billion, a 0.20% MoM increase, it was still $39.70 billion short of total imports. Analysts had expected a smaller deficit of $38.5 billion. This difference was due to the fact that the change in exports was no match for the 1.70% increase in MoM imports which reached $182.88 billion in the same period. The previous month’s deficit was revised marginally lower at $37.0 billion from $37.3 billion.
The higher than expected trade imbalance can be attributed to a jump in demand for consumer goods (+3.10%) and crude oil (+9.10%). Although the trade deficit can be considered a lagging indicator, this wider than expected imbalance supports the likelihood that the Federal Reserve will keep the overnight lending rate at its current 0.00 – 0.25% range as net exports is a component of GDP and a higher than expected number would have a negative impact on the 1Q2010 GDP report scheduled to be released on April 30th.
Additionally, the Bureau of Labor Statistics of the U.S. Department of Labor reported this morning that the U.S. Import Price Index rose 0.70% in March, missing analysts’ estimates of a 1.00% increase for the period. The previous month’s data was revised to -0.20% instead of -0.30%. The annual change was also slightly lower than expected at 11.40% versus 11.70%. A lower than expected Monthly Import Price Index will mitigate inflationary concerns, although just for today, as inflation will be revisited tomorrow when the Consumer Price Index is released at 7:30 am CDT.
Additionally, the Bureau of Labor Statistics of the U.S. Department of Labor reported this morning that the U.S. Import Price Index rose 0.70% in March, missing analysts’ estimates of a 1.00% increase for the period. The previous month’s data was revised to -0.20% instead of -0.30%. The annual change was also slightly lower than expected at 11.40% versus 11.70%. A lower than expected Monthly Import Price Index will mitigate inflationary concerns, although just for today, as inflation will be revisited tomorrow when the Consumer Price Index is released at 7:30 am CDT.
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