So Long to the Long Bond
The Treasury Department gave new meaning to the Halloween tradition of trick-or-treating. Our market contacts say it royally tricked many a trader, while potentially treating some on the BMA (privy to inside information?) when it announced, prematurely we might add, that it was eliminating the venerable long bond. Despite the fact the Treasury says it is not a "market timer," the Treasury's timing certainly smelled of that, especially as it achieved what neither Treasury jawboning nor Fed rate cuts could -- bring down long term yields. And, the key question at this point is whether this potential stimulus from the Treasury will put the Fed on a less aggressive (25 basis points) course on November 6.
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