- Treasuries rallied as recession fears intensified amid little data in the US this past week. What little data was released supported that the US economy is in the midst of a rather severe recession—with the Chicago Fed National Activity Index reaching a level not seen since January 1982. Still, given that the Chicago Fed NAI suggests that the recession began last December, we may be closer to the end than the beginning even if the recession is as long as the painful 1981-1982 recession.
- A second stimulus plan gained momentum last week, with Fed Chairman Bernanke expressing support. With Treasury issuance likely to rise to finance the TARP and a likely second stimulus plan, Treasuries may soon run out of room to rally. Also, with the Treasury holding the size of the 2-year and 5-year auctions this week, they may need to undertake off-cycle auctions, even though they have so far relied heavily on the bill market.
Fixed Income Strategy - Oct 26 2008
October 26th, 2008 · No Comments
Tags: Fixed Income Strategy
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