Tuesday Interest Rate Brief

Andrew Wilkinson submits: Global bond yields are standing easy ahead of the April FOMC meeting, which concludes its two-day meeting Wednesday with the first-ever press conference to be conducted by Ben Bernanke. And while U.S. bonds are leading major government yields lower, peripheral bond prices in Europe are once again in free-fall as investors grow increasingly concerned that debt restructuring is a near-certainty.

By Andrew Wilkinson: A rising tide of corporate earnings has lifted investors’ appetite for equities causing a rotation out of conservative government bonds. Advancing stocks and signs that a Gang of Six plan to reduce the nation’s deficit has found bipartisan support has tipped treasury prices over the edge.

Andrew Wilkinson submits: Bond markets shrugged off early morning weakness reminiscent of that morning-after feeling. The 13 basis point slide in the benchmark treasury yield on Tuesday was the largest in eight months and investors were quick to bank profits on Wednesday wondering whether the move was simply too much in response to heightened geopolitical worries.

Andrew Wilkinson submits: Bond investors had emotions tugged both ways as a volatile Libyan situation drove safe-haven demand skyrocketing before hawkish commentary from an ECB member later dampened enthusiasm for government paper. Yields continue to remain towards the day’s lowest point, however, as enthusiasm for a stock market recovery becomes a distant memory.

Andrew Wilkinson submits: Bond prices finally cracked to the downside on Tuesday after almost a week of deliberation following the Fed’s decision to wade deeper into the U.S. debt market. Investors were trapped between two views. The Fed’s presence would depress yields further as they aim to boost lending across the wavering economy.

Andrew Wilkinson submits: Government bond prices remained stubbornly buoyant despite an ongoing rebound from last week’s 11% slump in global commodity prices. Equity markets too are resilient with investors lifting prices back towards last week’s highs, the best performance in three years. Most investors seem reluctant to shake off their affair with bonds despite what appears to be a buoyant body of evidence that would suggest the onset of inflation and subsequently rising yields.

Andrew Wilkinson submits: Government bond prices remain firm and have reversed earlier losses. It’s all too easy to pin a decline on yields on rising fears surrounding the uprising across Egypt. Perhaps investors are starting to better understand the threat of rising commodity prices as signs of temporary pockets of strength, which might ultimately keep at bay the threat of monetary tightening.

Andrew Wilkinson submits: Government bond prices are lower once again as risk aversion ebbs and the flow of risk appetite resumes. Global stock prices are higher as investors are pricing in a lower chance of contagion as Irish leaders appear to be softening their resistance to a joint EU, ECB and IMF rescue package that according to Irish central bank Governor Honohan would involve a loan of “tens of billions” of euros.