January 21, 2004

Chart of the Day: Ten Year Yields

So...the great debate over the bond market rages on...with the question....will interest rates rise if no one wants them to? Europe probably does want them to, at least a little bit, to take the pressure off European exporters. How strange though. I guess this is the world of mobile capital. You'd expect slightly higher interest rates in Europe to attract capital...but the bigger worry here is losing manufacturing market share because the strong currency makes European goods more expensive. The dollar recommenced its slide against the euro yesterday. And as you can see from the chart...ten year rates are certainly low, historically speaking. Yesterday, IEF, Lehman's 7-10 year Treasury index, fell slightly, down 0.17%. And IEF hasn't quite been able to get up and over the 86.59 level from late September. Still, no decisive momentum in bond prices right now. You'd have to think that the Federal government expanding spending by 36%--under a Republican president--would concern foreign lenders. But then again, you'd have to think.


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