Morgan Stanley expects 10-year yields to rise 220 bps in 2010 – Posted by Edward Harrison – … Realistically, if rates spike to 5.5%, it would be a blood bath for insurers, and probably for pension funds (and hence municipalities as well). Mortgage rates would skyrocket and this would stop any housing recovery dead in its tracks. That sounds like double dip and depression to me; this is not an early 1990s economic environment. Ironically, 5.5% rates would sow the seeds of future 3.3% rates or lower. … –
Credit Writedowns
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What the U.S. Long Bond Market Is Telling Us… – Brad DeLong summarizes Krugman on UST 10 year rates and comes to this conclusion of risks – … Bear in mind that this whole story requires that the demand curve slope the wrong way for a while–that if the prices for Treasury bonds fall carry traders lose their shirts and exit the market, and so a small fall in Treasury bond prices turns into a crash until someone else steps in to hold the stock… – J. Bradford DeLong Blog
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Bills Yielding Zero as Stocks Soar Make Bernanke’s 1938 Moment – by Liz Capo McCormick and Daniel Kruger – … more on zero rates and appreciating stocks – lots of quotes – Bloomberg
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MBS Spreads to Widen, Rates to Rise in 2010: Smith Breeden – By DIANA GOLOBAY – Although demand should keep asset-backed securities (ABS) spreads tight into Q110, wider spreads in mortgage-backed securities (MBS) will follow the Federal Reserve’s exit of a major MBS purchase program in 2010, according to bi-monthly commentary by global asset management firm Smith Breeden Associates. … – HousingWire