Any idea how far equities will go as bonds weaken. I see from 30 yr bond and S&P charts that from 3/1 to 3/22 bonds weakened and S&P rallied from 1080 to 1180 where it tumbled at end of March nearly constantly until last week. Everyone is expecting a tumble this fall but IMO we may have 1-2 weeks upside in equities as bonds continue to weaken.
Some supporting info from Yahoo today.
"This is the beginning of the Treasury market's reassessment of the whole situation," said Anthony Karydakis, senior financial economist at Banc One Capital Markets. "And in view of the growing realization that stocks may have hit bottom, the Treasury market is backing up."
Karydakis said when stocks have a down day, Treasuries will pick up some gains. But he said the day-to-day fluctuations would not matter if investors concluded that stocks have fallen as far as they will go.
An announcement expected Wednesday on the Treasury's August debt sales was also a negative for bonds. Treasury is expected to announce it will sell $22 billion of new five-year paper and $15 billion of benchmark 10-year notes the following week, according to Wrightson Associates.
Treasury may also announce it will go to quarterly 10-year note sales to meet its rising borrowing needs, ditching its practice of regularly reopening these issues.
The Treasury said on Monday it would have to borrow $76 billion in the period between July and September and another $71 billion between October and December.
AI
