Committee for a Responsible Federal Budget

Market Watch Update: April 19-23

Apr 23, 2010 | Economics

As of mid-day Friday, April 23, the yield curve looked steeper for the week (that is, interest rates rose on Treasury instruments at the longer end of the maturity spectrum). Market commentary was cited as the main driver, the response of investors to stronger than expected U.S. data suggesting that the recovery was taking hold. As the U.S. and global economies show signs of returning to some sort of normal, investor interest in U.S. Treasury instruments as a safe haven is expected to diminish, although there are other worries (including sovereign debt concerns elsewhere) that might move markets in the other direction.

Other factors cited as backdrops to this week’s market developments were: Greece’s continuing sovereign debt ups and downs (U.S. as safe haven again); in the run-up to the next Open Market Committee meeting of the Fed, unconfirmed reports that a number of Fed officials want to sell more assets to unwind crisis policies faster; and some strong U.S. company earnings reports. Weak inflation news did not seem to have much of an impact.