Raise Rates?

 Prices of Treasury coupon securities have taken a wild course through a volatile and hazardous trading session. The market has traded against a backdrop and fear which I have delineated in earlier posts.What is the proximate cause of the fear and loathing of anything but the most liquid investment vehicles. The folks with whom I speak tell me that the seed of this latest round of carnage has sprung from the muni market. Spreads on long dated munis have moved 150 basis points against munis o... more

Weakness in withholding taxes points to some downside risk to the February labor report due out Friday,according to economists at JPMorgan. Here is their write up sans the chart. Now that the Daily Tax Statement (DTS) data for February is complete, it appears that withheld income and employment taxes�a noisy proxy for labor income�has decelerated sharply early in the year. This development suggests some downside risk to this Friday’s payroll report (JPM: 0k, ... more

 It has been a frightening day in the financial markets. As one old friend describes it, “the wheels are falling off�. There are quite a few manifestations of the fear which pervades the market place and here are but a few: The 2 year Treasury note traded to a low yield of 1.50 percent today. The spread between the 2 year note and the 10year note reached 200 basis points. Two year swap spreads reached 100 basis points. Credit Default Swaps on bank and broker names are gapping wider... more

 Some mortgage market bullet points: FNMA 5 s 20/32 wider to swaps and 5 .5s 21/32 wider to swaps. And swaps are lagging Treasury debt. Dealers report a buyers strike and a litany of requests which begin,�Bid wanted�! Dealer positions of illiquid paper increase as repo desks force liquidations. ABX meltsdown as hedge funds and retail sell. AAA CMBX wider by 10 to 15 basis points. And cash A4s wider by 7basis points to 8 basis points. Strap youurself it. ... more