April 25 (Bloomberg) -- A gauge of investor confidence in the U.S. leveraged-loan market is headed for its biggest monthly increase since being created last year as banks find ways to sell loans they have been stuck with the past 10 months.
The LCDX index is rallying as Citigroup Inc., Deutsche Bank AG and the rest of Wall Street whittle down their leveraged-loan liabilities to about $91 billion from a peak of $237 billion in August, according to Bank of America Corp. strategists led by Jeffrey Rosenberg in New York.
The LCDX Series 9, a credit-default swap index tied to the loans of 100 companies in the U.S. and Canada, has climbed 3.5 percentage points to 96.9, according to Goldman Sachs Group Inc. A newer version LCDX 10, used to hedge against losses or to speculate on the ability of companies to repay their debt, is up 2.1 percentage points to 99.1 since it started trading April 8.
``It's been quite a euphoric run for the market,'' said Alan Alsheimer, who trades the LCDX contracts at Goldman Sachs in New York.
4/22/08
MARKET COMMENTARYU.S. Treasuries fell, pushing two- year yields to almost the highest level in three months, as traders increased bets the Federal Reserve may be done lowering interest rates. Two-year notes declined for a seventh day before a planned $30 billion auction of the debt tomorrow. The Treasury Department will sell $8 billion of five-year Treasury Inflation Protected Securities today. The benchmark two-year Treasury's yield rose 3 basis points, or 0.03 percentage point, to 2.2 percent at 8:46 a.m. in New York, according to bond broker BGCantor Market Data. The price of the 1.75 percent security due in March 2010 fell 2/32, or 63 cents per $1,000 face amount, to 99 6/32. Ten-year yields rose 1 basis point to 3.74 percent. The yield on two-year notes, most sensitive to the outlook for interest rates, rose as traders see a 14 percent chance the Fed will keep its benchmark rate for overnight loans between banks at 2.25 percent on April 30, up from no chance a week ago. The odds are 86 percent the central bank will lower its target rate to 2 percent this month, futures on the Chicago Board of Trade show. A month ago, most of the bets were for a cut to 1.75 percent. The Fed has lowered its target rate from 5.25 percent since September as banks and securities firms around the world reported about $288 billion in asset writedowns and credit losses since the beginning of 2007.
4/16/08
The best place to buy a home these days
The 6 cities where home prices are likely to rise the most - or fall the least - in the next 12 months.
The 6 cities where home prices are likely to rise the most - or fall the least - in the next 12 months.
4/15/08
The Labor Department reported this morning that surging costs for energy and food worldwide pushed the March inflation reading at the producer level up 1.1% -- and up 6.9% on a year-over-year level – its highest mark since the early 80’s. Core producer prices – a value that excludes the more volatile food and energy components – rose a more modest 0.2% -- but on a year-over-year basis it is up 2.7% -- well above the Fed’s stated “comfort” zone and its highest annualized mark in more than a decade.
Tomorrow’s headline Consumer Price Index is expected to post a month-over-month gain of 0.4% while the core rate (a value that excludes the more volatile food and energy components) is expected to be 0.2% higher for the month. March consumer inflation numbers that fall below the consensus forecast for both the gross and core consumer inflation rates will probably prove to be supportive of steady to fractionally lower mortgage interest rates. Actual values that match or exceed market expectations for both components of the March Consumer Price Index will likely put some upward pressure on note rates as investors sharply reduce their expectations for more mortgage market friendly rate cuts from the Fed this year.
Tomorrow’s headline Consumer Price Index is expected to post a month-over-month gain of 0.4% while the core rate (a value that excludes the more volatile food and energy components) is expected to be 0.2% higher for the month. March consumer inflation numbers that fall below the consensus forecast for both the gross and core consumer inflation rates will probably prove to be supportive of steady to fractionally lower mortgage interest rates. Actual values that match or exceed market expectations for both components of the March Consumer Price Index will likely put some upward pressure on note rates as investors sharply reduce their expectations for more mortgage market friendly rate cuts from the Fed this year.
4/14/08
This weeks reports
This week brings us the release of seven relevant economic reports for the bond market to digest. We are also heading into corporate earnings season which could lead to fluctuations in the stock markets. If earnings come in lighter than estimates, the stock markets may fall, leading to an influx of funds into bonds. But, if earnings and forecasts are strong, the major stock indexes may rally, pulling funds from bonds and leading to higher mortgage rates. Some of the most influential companies don't report quarterly earnings for a few more weeks, but the early releases could affect optimism about what those big named companies' earnings will show.
4/12/08
4/11/08
Univ of Michigan Sentiment
12:17 ET 10-Yr: +21+/32..3.458%.. GNMAs: NA.. USD/JPY: 100.9500.. EUR/USD: 1.5817
Sentiment Says...: Trade is holding in near the best levels, but size has fallen off and the equity elves are up to their mischief again, trying to buy back into better territory. The session may be over however, with the volume having been sucked out and traders stepping to the sidelines. Global bonds are also catching a bid, with the German bund hanging at the best levels since the start of the month. The early GE news helped early while the terribly, terribly off sentiment measure was unable to add much to the bid as the negative whispers in advance took some of the sting out of the number (which hit at the worst levels since 1982. 1982.). The market will have some trouble pushing into much better ground, with the lofty, multi-year highs serving to weigh technically. While the weekend safe haven buying as well as a potentially less useless G7 going down will help to keep a floor under prices. The curve has been leaning steeper, but at a less steep inclination than earlier in the week with the 2-10-yr yield spread now running 171.7. UofM sentiment hit 26-yr lows while trade prices were lofty. The buck was a little offered on the sentiment downside miss but currencies are deferring to ranges mostly. Spot gold is off at 923.49 (-5.51) as is crude oil at 109.34 (-0.77).
Sentiment Says...: Trade is holding in near the best levels, but size has fallen off and the equity elves are up to their mischief again, trying to buy back into better territory. The session may be over however, with the volume having been sucked out and traders stepping to the sidelines. Global bonds are also catching a bid, with the German bund hanging at the best levels since the start of the month. The early GE news helped early while the terribly, terribly off sentiment measure was unable to add much to the bid as the negative whispers in advance took some of the sting out of the number (which hit at the worst levels since 1982. 1982.). The market will have some trouble pushing into much better ground, with the lofty, multi-year highs serving to weigh technically. While the weekend safe haven buying as well as a potentially less useless G7 going down will help to keep a floor under prices. The curve has been leaning steeper, but at a less steep inclination than earlier in the week with the 2-10-yr yield spread now running 171.7. UofM sentiment hit 26-yr lows while trade prices were lofty. The buck was a little offered on the sentiment downside miss but currencies are deferring to ranges mostly. Spot gold is off at 923.49 (-5.51) as is crude oil at 109.34 (-0.77).
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