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China Inflation at 18 Month High
05/11/2010
The euro gave back all its gains from yesterday in early trading on concerns that the near $1T bailout package will hinder growth going forward. Inflation in China accelerated to an 18-month high, increasing chances that the government will have to raise interest rates. The Treasury will auction $38B in 3yr notes today, $24B in 10yr notes tomorrow, and $16B in 30yr bonds on Thursday. Right now, the futures market is pricing in a 65% chance that the Fed keeps rates at .25% through September 21st, 2010. Currently, the Ten Year yield is at 3.558% (3.56% on Friday) and the 2-10 yield spread is at 266bps.
