Committee for a Responsible Federal Budget

Market Watch Update: April 26-30

Apr 30, 2010 | Economics

As of mid-day Friday, April 30, the government bond market was on track to have a good week, with prices up (and therefore yields down, because they move in opposite directions).

According to the financial press, a key driver was end of the month effects (managers needed to buy newly auctioned Treasury instruments, to close the loop on their monthly portfolio strategies).

Safe haven effects from the sovereign debt crisis in Greece were also thought to increase demand for U.S. Treasury instruments.

On the domestic side, upward pressure on interest rates at the longer end of the market eased as new data appeared to confirm the view that the US economic recovery would be subpar. The Fed’s decision to leave monetary policy on hold for the time being at its regular FOMC meeting reinforced this view.

Next week, the Treasury Department will announce its borrowing plans for the next quarter. According to one report, many market participants anticipate that it will start to reduce its auction size in view of the strengthening economy.