It was only last April when John Kosar, the president of Asbury Research, insisted that anyone with a pencil and ruler could prove the 25-year bull market in Treasury bonds was over.
Kosar said then that the looming decline was so obvious even a five-year-old could see yields would climb for ``many years'' to come. He acknowledged in an interview last week that ``trends have changed'' since July, when subprime mortgage losses began to contaminate credit markets. Citing charts of 30- year bond futures, Kosar said from his office in Lake in the Hills, Illinois, that the government bond market ``did an about- face'' and is now ``pointing to lower'' yields.
The yield on the 10-year U.S. note fell as low as 3.79 percent on Nov. 26 from a five-year high of 5.32 percent in June as investors sought the safety of government debt amid mounting losses on securities linked to borrowers with poor credit. Treasuries have returned 7.71 percent this year, the most since 2002, when they gained 11.6 percent, according to Merrill Lynch & Co. index data.
The sudden rise in the cost of credit sparked by the subprime collapse forced technical analysts, who make market predictions based on historical price patterns, to change their expectations. The difference between the interest rate banks pay for three-month loans and government borrowing costs, called the TED spread, reached 2.21 percentage points on Dec. 11, the highest since Aug. 20. The last time the spread was this high this long was in the aftermath of the 1987 stock market crash.
http://www.bloomberg.com/apps/news?pid=20601109&sid=auAUGxLuVdqg&refer=home
Perfect headline for a short entry...
Kosar said then that the looming decline was so obvious even a five-year-old could see yields would climb for ``many years'' to come. He acknowledged in an interview last week that ``trends have changed'' since July, when subprime mortgage losses began to contaminate credit markets. Citing charts of 30- year bond futures, Kosar said from his office in Lake in the Hills, Illinois, that the government bond market ``did an about- face'' and is now ``pointing to lower'' yields.
The yield on the 10-year U.S. note fell as low as 3.79 percent on Nov. 26 from a five-year high of 5.32 percent in June as investors sought the safety of government debt amid mounting losses on securities linked to borrowers with poor credit. Treasuries have returned 7.71 percent this year, the most since 2002, when they gained 11.6 percent, according to Merrill Lynch & Co. index data.
The sudden rise in the cost of credit sparked by the subprime collapse forced technical analysts, who make market predictions based on historical price patterns, to change their expectations. The difference between the interest rate banks pay for three-month loans and government borrowing costs, called the TED spread, reached 2.21 percentage points on Dec. 11, the highest since Aug. 20. The last time the spread was this high this long was in the aftermath of the 1987 stock market crash.
http://www.bloomberg.com/apps/news?pid=20601109&sid=auAUGxLuVdqg&refer=home
Perfect headline for a short entry...
