Bonds closed better today with the 10-year Treasury -.044% with the rate at 4.590%.  As we thought, there was some volatility in absence of any significant data.

In mid-morning the bond market was reacting to a meeting between FED Chair Ben Bernanke, Treasury Secretary Henry Paulson, and Senate banking Committee Chair Chris Dodd.  The meeting was behind closed doors, but Senator Dodd held a news conference afterwards.  He stated that, “The FED gets it and understands” concerns about the credit squeeze.  This gave traders and investors confidence that the FED was taking the credit crunch seriously.

The positive rate reaction was short lived.  Richmond FED president Jeffrey Lacker spoke later in the trading day.  This blog thought that he mai9ght cause rates to increase.  He did not disappoint.  Rates were far lower, before Mr. Lacker’s speech.   The rate on the 10-year Treasury moved upward equal to Monday’s closing price. 

Shortly after bonds returned to the previous level and closed where at the previous level.

Steve Boxmeyer [612] 799 – 6858

steve@LendWithIntegrity.com