Lower yield =higher bond prices, which implies greater demand.
If risk on corporate securities (AAA) is considered to be low, you have a pretty low spread between treasuries and AAA.
What we are seeing now is the spread opening wide - because perceived risk of corporate debt is going up, due to selling of corporate debt and buying of treasuries.
I found this over at HBB. Seems directly relevant to TJ's question
This from Merrill Lynch's economic research this morning - shows just how far the fear and credit crunch have spread:
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"Meanwhile, the contagion has arrived. High-yield spreads have now widened 150 bps from their nearby lows to 417 bps, the widest since 30 June 2005. BBB-rated bonds have widened more than 30 bps to over 150 bps – widest since March/05. And even A-rated paper has been hit by all the uncertainty – nearly 25 bps wider to 114 bps and this is the widest spread since October/02. Emerging market equities got clocked 2.6%, in the worst session in nine months, while spreads off Treasuries soared 26 bps to 222 bps – widest since June/06... The ABX index for BBB sagged 5% to 37.72, and AAA product also dropped 1.6% to 92.97. And in a sign that the moves we are seeing are not just "financial" but also "economic" look at how the CRB dropped yesterday and rapidly closing in on its 50-day moving average of 316 (ditto for gold – at $660/oz)."
<sarcasm>
It's good that all housing is local. Otherwise I might suspect that the death throes of credit might apply downward pressure on our faltering housing market. I'm just glad that all the young workers at Microsoft and Boeing make $150,000 a year, so our median housing price is really quite justified.
</sarcasm>
now there's this little gem, courtesy of our friend Genesis over at Market Ticker, posted on the forums.
AHM has pulled it's dividend payment. This is for an ex-dividend date payment. That means people who own the stock already have the money credited to their accounts by their brokers. There is a long thread on just that topic over at the Yahoo forum! This is going to be ugly...
The disruption in the credit markets in the past few weeks has been unprecedented in the Company's experience and has caused major write-downs of its loan and security portfolios and consequently has caused significant margin calls with respect to its credit facilities.
The quarterly cash dividend of $0.70 per share on the Company's common stock had been declared on June 15, 2007 and was to be paid on July 27, 2007 to all shareholders of record as of July 9, 2007. The Series A Preferred Stock dividend and Series B Preferred Stock dividend had been declared on June 15, 2007 and are payable on July 31, 2007, to shareholders of record as of July 9, 2007.
Comments
Humor us less enlightened folks. Ten year treasury notes being down is significant, why?
If risk on corporate securities (AAA) is considered to be low, you have a pretty low spread between treasuries and AAA.
What we are seeing now is the spread opening wide - because perceived risk of corporate debt is going up, due to selling of corporate debt and buying of treasuries.
<sarcasm>
It's good that all housing is local. Otherwise I might suspect that the death throes of credit might apply downward pressure on our faltering housing market. I'm just glad that all the young workers at Microsoft and Boeing make $150,000 a year, so our median housing price is really quite justified.
</sarcasm>
AHM has pulled it's dividend payment. This is for an ex-dividend date payment. That means people who own the stock already have the money credited to their accounts by their brokers. There is a long thread on just that topic over at the Yahoo forum! This is going to be ugly...