So we were looking for stability in the interest rate area yesterday and we got it as the 10 year treasury is unchanged today. Of course with the DJIA average down 400 right now you would expect interest rates to drop a bit.
Yesterday we personally saw good recovery from the small losses we incurred last week–in fact we are about even and are more than happy about that.
This afternoon we have a fairly large 10 year treasury auction which will be interesting – we will see what the demand is for the paper. We think this is one of the most important numbers for now. The marketplace is acting like buyers will demand higher rates yet so we will see if this starts a new round of selling in income issues. Normally after a larger spike in rates like we have seen in the last week or two we would see a few weeks of ‘backing and filling’ in rates–if rates were to now move higher by more than a few basis points we would be concerned that we could spark a ‘tantrum’.
We have to head out of the office for a few hours so we will miss the fun, but needless to say if you have been doing any selling today or yesterday it would be good to build a bit of dry powder–given the money market rates now being over 2% holding a little extra cash isn’t quite as painful as it has been in recent years.