Treasuries Brace for FOMC Meeting
The markets saw more curve steepening Monday in miserly conditions ahead of the Federal Open Market Committee's meeting Tuesday at 9 a.m. EST.
On the front end, defensive trade benefited from trading at "zero" near-term growth -- a scenario alluded to by Federal Bank Chairman Alan Greenspan -- but faded on the long end on the risk that Greenspan is successful. Eurodollar notes and bills gained and two-year notes held their ground, while the March bond tripped a couple tiers of stops from 102-21 and again at Friday's low of 102-16. After the buyers' strike the March bond found some traction with a bleak outlook for January consumer confidence, to be released Tuesday, which supported the market at the close.
Equities were of two minds following cautious guidance from Cisco (CSCO ) on earnings variability near-term, DaimlerChrysler's (DCX ) 26,000 job layoffs and record Internet infrastructure layoffs reported by Challenger. Still, the Nasdaq built on gains above its 50-day moving average near 2700. The corporate calendar continued to build, as the GE Capital unit of General Electric (GE ) priced and Nortel (NT ) pondered a $1 billion five-year deal. The Treasury estimated a $197 billion Q2 debt paydown.