US Debt in Demand

The US 10-year eased-22bp yesterday (+2.20%) and is little changed in the O/N session. Treasuries again have rallied, extending the longest winning streak in two-years, as renewed concern Greece will default and the European rescue plan will unravel boosted demand for a safer asset class. It is the third consecutive day for the FI asset class to rally, shaving close to -42bp off the benchmark 10-year. Greek Prime Minister Papandreou has called for a referendum and a parliamentary confidence vote. He is risking pushing the country into default if rejected by voters.

The debt market has found further support from global equities plummeting over the last two sessions on growth worries from China. Later today, the market gets to hear from the FOMC and policy makers’ stance on perhaps QE3. With the Euro euphoria not being a solution and the possibility of contagion potentially appearing on the horizon will have product better bid on pullbacks. With reported US domestic data underwhelming has investors wishing to err on the side of caution.

Earlier this week, dealers have been front running the theory that with Japan intervening, because of an overvalued domestic currency, will be expected to translate into official buying in the Treasury market.

The Nikkei closed at 8,835 down-153. The DAX index in Europe was at 5,903 down-237; the FTSE (UK) currently is 5,409 down-135. The early call for the open of key US indices is lower.

     

    U.S. Ten-Years

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    Dean Popplewell

    Dean Popplewell

    Vice-President of Market Analysis at MarketPulse
    Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
    Dean Popplewell
    Dean Popplewell

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