Bonds are looking at equities. The equity market has stabilized after yesterday's tumble and the auction lends a negative backdrop because the market has to absorb more supply.
You should see bonds trading a little bit higher on this because there's a bit more slowdown in it than we were anticipating.
Yesterday, the Fed's effective funds rate, the average of the funds rate that exists throughout the day, was 1.25 percent, way below their new 3 percent target. Today, it's even softer than that, below 1 percent.
The only thing (to drive Monday trade) is the question of whether there's much setup left for tomorrow's Humphrey-Hawkins.
It's an extremely strong start to the first quarter. We've had pressure on the market for a while. This maintains that pressure.
Yields have cheapened up, but if the Fed's going to go further, they still may not have value at that level.
Greenspan is speaking tonight and it's a matter of some concern that he could surprise people.
At these prices right now, people are saying the Fed is going to have to do more to bail out the system for investors to take on leverage again.
Concern about deflation makes bonds look good relative to stocks.
The real has been the main factor behind this rally.
