The Rally in U.S. Treasuries Comes to an Abrupt End

At about 12:30 est on Friday a healthy dose of reality washed over the markets and waves of selling hit the U.S. Treasury bond market and did not stop until the yield on the benchmark 30 year bond hit the 50 day moving average overhead at which point the bears retreated a bit for the day and week.  Yields ended the week at 3.45% up very slightly from 3.42% but any and all gains from the first four and a half days were wiped out in about 90 minutes.

The 10 year note didn’t fare much better, closing just above its 50 day MA at 2.216% yield.  For the week the yield on the 10 year note lost 0.02%.  While the yield on the 5 year note closed above 1.04%.  One could go back to the 5 year note auction on Wednesday where the yields came in at 1.03% for the first time since October as marking the bottom for this rally in bond prices.

Surprisingly, with all of the talk of another LTRO in the works and the vehement denials emanating out of Europe for the need for more LTRO events for Spanish or Portuguese debt problems the overnight lending market did not react much at all on Friday, with the OIS 3 month yield down slightly to 0.13%.

Gold closed a very volatile the week at $1669.75 per ounce, up $8.40 over last Friday’s close.


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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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