What's Going on in the Bond Markets?

[WDCRob]

I barely know a bond from a bill, but these seem like outsized moves. Anyone know what's behind them?

10 Yr Bond 3.67 -0.42 -10.28%
30 Yr Bond 4.56 -0.37 -7.52%

[ThePythonicCow]

Re: What's Going on in the Bond Markets?

I barely know a bond from a bill, but these seem like outsized moves. Anyone know what's behind them?

10 Yr Bond 3.67 -0.42 -10.28%
30 Yr Bond 4.56 -0.37 -7.52%

Those are the yields going down in U.S. Treasuries. The market just took a spastic move toward the Dollar and US Treasury prices UP, everything else DOWN. The $VIX Volatility Index jumped from 17.58 to 19.36, another outsized move. The horses are getting skittish and starting to bolt back to the barn.

[WDCRob]

Re: What's Going on in the Bond Markets?

Thanks Cow. Believe it or not (and I'll forgive you if you vote "not") I had that much right! ;)

But why is it happening? This seems mega (MEGA?) spastic to my untrained eye.

[WDCRob]

Re: What's Going on in the Bond Markets?

10 Yr Bond 3.65 -0.56 -13.30%
30 Yr Bond 4.55 -0.53 -10.44%

[jpatter666]

Re: What's Going on in the Bond Markets?

Thanks Cow. Believe it or not (and I'll forgive you if you vote "not") I had that much right! ;)

But why is it happening? This seems mega (MEGA?) spastic to my untrained eye.

Greece starting to go under again, China tightening again. The waves are getting choppy and no one wants to be last on the dance floor this time.

Typical behavior as we've seen over the past few months. Slow grinding moves up, fast choppy moves down.

[WDCRob]

Re: What's Going on in the Bond Markets?

Is it fair to say this is close to full on panic buying?

10 Yr Bond 3.64 -0.67 -15.59%
30 Yr Bond 4.53 -0.64 -12.39%

[Rajiv]

Re: What's Going on in the Bond Markets?

logical outcome to Coakley's loss. The consensus appears to be that Obama has to change direction -- otherwise come November --> No Democratic Party

[ThePythonicCow]

Re: What's Going on in the Bond Markets?

But why is it happening?

The apparent provocation seems to be Summary Bank Results Recap:

• Morgan Stanley Q4 EPS $0.14 versus analyst estimate of $0.42; Revenue $6.8 billion vs Est. of $7.8 billion
• Bank of America Q4 EPS ($0.60) versus analyst estimate of $(0.52), Revenue of $25.4 bn vs Est. $26.9 bn; $10.1 bn in loss provisions
• Wells Fargo Q4 EPS $0.08 versus analyst estimate of $0.01; $25 bn in loss provisions - $500MM increase

Both Morgan Stanley and Bank of America join JPM in revenue misses: so much for the fabled revenue recovery in Q4.

[Jim Nickerson]

Re: What's Going on in the Bond Markets?

Is it fair to say this is close to full on panic buying?

10 Yr Bond 3.64 -0.67 -15.59%
30 Yr Bond 4.53 -0.64 -12.39%

Rob, someway you are screwing with the decimal placement.

Below are the treasury yields at 12:19PM today.



The "Last Price" is the amount of interest paid on a $1000 note or bond. Take the 10-year note interest $TNX above as shown is 36.44/1000 or a rate of 3.644% yield. In the above frame the % change from yesterday was -1.70%, so even at its worst today, the percentage change is nothing like the figures you've posted.

[ThePythonicCow]

Re: What's Going on in the Bond Markets?

Rob, someway you are screwing with the decimal placement.

I don't think so.

There are two different things here that could be called "percentage change".

For a simple example, let's say the interest rate on my line of credit drops from 10% to 9.5%. I could say that this is a 0.5% drop (10-9.5), or I could say that this is a 5% change (10-9.5/10). The rate dropped 0.5%, which is 5% of it's original 10%.

Rob's numbers were the second kind. On tables of stock and bond market values and changes (e.g. Stockcharts.com: Market Summary) the second kind (a drop from 10% to 9.5% is a 5% change) is more consistent because the other items in the table are not percentage changes of percentages, but rather percentage changes of prices or other indices.

[Jim Nickerson]

Re: What's Going on in the Bond Markets?

I don't think so.

There are two different things here that could be called "percentage change".

For a simple example, let's say the interest rate on my line of credit drops from 10% to 9.5%. I could say that this is a 0.5% drop (10-9.5), or I could say that this is a 5% change (10-9.5/10). The rate dropped 0.5%, which is 5% of it's original 10%.

Rob's numbers were the second kind. On tables of stock and bond market values and changes (e.g. Stockcharts.com: Market Summary) the second kind (a drop from 10% to 9.5% is a 5% change) is more consistent because the other items in the table are not percentage changes of percentages, but rather percentage changes of prices or other indices.

Rob's posts were wrong, the one I made is correct.

[jmdpet]

Re: What's Going on in the Bond Markets?

For a simple example, let's say the interest rate on my line of credit drops from 10% to 9.5%. I could say that this is a 0.5% drop (10-9.5)

This is called a 0.5 percentage point drop.

http://en.wikipedia.org/wiki/Percentage_point

[jtabeb]

Re: What's Going on in the Bond Markets?

logical outcome to Coakley's loss. The consensus appears to be that Obama has to change direction -- otherwise come November --> No Democratic Party

I think you just nailed it (+1)

[ThePythonicCow]

Re: What's Going on in the Bond Markets?

Rob's posts were wrong, the one I made is correct.

Aha - you're right, mea culpa.

Roughly the yield on the ten year Treasury note went from 3.707% (close yesterday) down as far as 3.636% (low for today), a "percentage point drop" (thanks jmdpet) of 0.071% (1), which drop is a 1.9% (2) percentage change down from 3.707%.

Is that better?

Footnotes:

1. 3.707 - 3.636 ==> 0.071
2. 0.071 / 3.707 ==> 1.9

[ThePythonicCow]

Re: What's Going on in the Bond Markets?

logical outcome to Coakley's loss. The consensus appears to be that Obama has to change direction -- otherwise come November --> No Democratic Party

Careful what you wish for, or what you suppose that Obama should wish for, as the case may be. George W. Bush got the "change" he needed when 3000 American civilians were killed.