GO
Loading...

The Interest Rate Scare

Friday, 12 Jun 2009 | 5:59 PM ET

Once again, the market managed to side-step the threat of rising interest rates.

In fact, investors appeared eager to move back into the Treasury market Thursday after a surprisingly strong auction of 30-year bonds, pulled yields down from multi-month highs.

Treasury yields are closely tied to interest rates on mortgages, and both have been rising for several weeks as investors worried about inflation.

The U.S. Treasury Department offered a yield of 4.72 percent to lure in buyers — the highest yield offered at a 30-year bond auction since August 2007, but lower than the market anticipated.

And the auction got plenty of bidders. The ratio of bids to bonds sold was 2.68 percent, much higher than the 2.14 ratio at last month's auction of 30-year bonds.

Even demand from other countries appeared very strong. Indirect bidding, which usually consists largely of foreign bids, contributed to nearly half of the total bids accepted.

Investors had grown concerned earlier in the week about foreign demand after a Russian central bank official said the nation was considering reducing its U.S. Treasury holdings.

Big Test for Transports
Assessing whether the transport sector can pull stocks higher next week, with the Fast Money crew.

Many investors now say those fears were overblown.

"I don't think the foreigners are going to abandon the Treasury market," says John Spinello, bond strategist at Jefferies & Co. "They can't afford to abandon the Treasury market."

What lies ahead?

Next week, the govenrment will not hold any auctions, so trading will likely be light and calm, Spinello says. The following week, though, could be a wild one as the government resumes its auctions.

We'll be watching.


______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On June 12th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (AGU), (USO), (BAC); Najarian Owns (FCX) Call Spread; Najarian Owns (MCD) Calls; Najarian Owns (RCL) Calls; Adami Owns (AGU), (BTU), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Owns (TER), (XBI), (SDS), (BTU), (RIMM); Terranova Owns (X) And Is Short (X) Calls; Terranova Owns (MS) And Is Short (MS) Calls; Terranova Owns (JPM) And Is Short (JPM) Calls; Terranova Owns (POT) And Is Short (POT) Calls; Terranova Owns (BRCM) And Is Short (BRCM) Calls; Terranova Owns (IBM) And Is Short (IBM) Calls; Terranova Owns (HES) And Is Short (HES) Calls; Terranova Owns (GENZ) And Is Short (GENZ) Calls; Terranova Is Short (OIH); Terranova Is Short (RIG); Terranova Is Short (XOM) Call Spreads; Terranova Owns (DIS) Call Spreads; Terranova Is Short Aug. Nymex Crude Oil; Terranova Is Short September Nymex Crude Oil; Terranova Is Short December Nymex Crude Oil; Terranova Owns December 2011 Nymex Crude Oil; Terranova Is Short August Gold Futures; Terranova Is Short July Natural Gas Futures

Terranova Works For (VRTS); Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV); Virtus Investment Partners Owns More Than 1% Of (ABD), (CAL), (CLB), (DLR), (EPR), (EXR), (IGE), (MEE), (DBC), (DBV), (DBA), (SKT), (UA), (WBMD); Virtus Investment Partners Owns More Than 1% Of St Mary Land & Exploration Co; Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights

CNBC.com with wires

Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET
  • Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

  • Scott Wapner is host of the "Fast Money Halftime Report," which airs weekdays from 12 p.m. to 1 p.m. ET.

  • Guy Adami is a contributor on CNBC's "Fast Money." He also is managing director of stockMONSTER.com.

  • Najarian, the "Pit Boss," is cofounder of optionMONSTER.com, a news site for options traders.

  • Finerman is president of Metropolitan Capital Advisors, Inc., a company she co-founded.

  • Founder of EmergingMoney.com

  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

Halftime Report