The 10 year treasury is popping higher again this morning as fears of massive economic stimulation are causing inflation expectations to gain traction once again.
The 10 year treasury had traded as high as 1.73% yesterday before closing the day at 1.72%. This morning we are tacking on another 4 basis points to around 1.76%.
Thus far this hasn’t ‘hurt’ income issues, but moves higher from here are probably going to cause some pain. Once again I remind folks that if we can keep the interest rate moves higher to only a few basis points here and there the pain will be muted–a sharp 1 or 2 day move of 1/8% or more could cause a panic of sorts inflicting severe damage on the high quality, low coupon issues.
We shall see–we could see some extraordinary opportunities in the months ahead.