Courtesy of Lee Adler of the Wall Street Examiner
Here are several key bullet points in this report.
• The haircut to be administered to bank depositors in Cyprus, not yet finalized as of this writing, has again tilted the playing field to drive foreign capital into the Treasury market, which should prevent an upside breakout and send yields lower in the short run. The 1.85 to 2.10 range should remain intact for a while.
• Treasury supply will be heavy this week, while support from the Fed is reduced at the end of the month. This would normally unsettle the market a bit. But much of the $100 billion in Fed pumping from mid month may still be available for deployment. That could keep bids under both Treasuries and stocks.
• Foreign central bank (FCB) buying is in the weak side of its short term buying cycle but renewed fears over the European financial crisis are likely sending more private foreign capital flooding into the US Treasury market, and more Fed cash will be on the way, so weak FCB buying should not be enough to slow the markets.
• Public buying remained a bullish factor for bonds. Panic in Europe would add to that.
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