Excerpt from: Bonds and Interest Rates CFDs and Spread Bets
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| December 08, 2006 | | 2-year U.S. government bonds fall on jobs data | With the economy adding more jobs than forecasted, two-year U.S. government bonds are declining. Because they are more sensitive to monetary policty speculation than their longer-term counterparts, two-year Treasury Notes are more subject to the whims of economic data. Spread bets and CFDs should tread carefully around 2-year U.S. government bonds, and short them in spread betting and contracts for differences for now. Bloomberg reports:
More sensitive than longer-maturity debt to expectations for
monetary policy, two-year notes declined as traders pared
expectations for a first-quarter interest-rate reduction by the
Federal Reserve.
``Every time we get a report that shows the economy's not
doing that badly, it's going to push back the market's
expectations for when the Fed's easing cycle is going to begin
next year,'' said Joseph Shatz, senior government bond strategist
in New York at Merrill Lynch & Co., one of the 22 primary
government security dealers that trade with the Fed. | | |
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