What happened to the entire fixed-income, as well as stock, markets yesterday?
In the middle of the usual weekly auction, the $42 billion 5-yr Treasury sale went poorly (“sloppy”), as well as suddenly investors realized that yes indeed, our deficit is growing, as well as demand may drop for our securities. Volatility increased, as well as the yield on the 10-yr broke through a key level of 3.80% as well as into the abridged 3.80’s. Mortgage prices worsened by up to a point, hitting levels that we haven’t seen in a month. READ MORE. In addition, dealers say that they are seeing “money center” banks doing some selling to recognize gains prior to the end of the quarter, as well as in fact mortgage selling was estimated at three times the average daily volume over the final few weeks. There is continued nervousness about Greece as well as Portugal impacting the entire credit market. Portugal’s budget deficit is over three times the European’s limit of 3 percent at 9.3 percent of GDP.
