Friday, April 3, 2015

Treasury Curve Responds to Employment Data

The Treasury curve reacts strongly to the employment data, widening the yield spread between 5 and 30 years above a trend line dating to mid-January.  This yield spread trades to 122 basis points from a low of 105 bps at mid-month.  We are told there are a number of accounts with bear flattening positions that may view today’s data as inconsistent with their expectations for policy rate response to economic prospects.  Technical and now recent fundamental data offer support to this spread.  Positioning considerations may provide a spark for a more exciting push wider in this yield spread.

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