Market Analysis

Bonds were strong yesterday in midday trading and then lost steam toward the end of the day.  They opened slightly worse this morning.  The 10 Yr US Treasury note is currently yielding just below 2.0% at 1.99%.  The 10 Yr has had difficulty remaining below 1.99% and as such investors are trading it cautiously.  The recent pattern has been for it to dip below 2% and then move up to the 2.2% range fairly quickly.

In Europe bond yields for debt issued by Spain and Italy have come down slightly with Spain's 10 Yr Note dropping from 6.90% to 6.76% and Italy's from 6.84% to 6.62%.  Investors will be looking to Europe for directional ques on US Treasury yields.  Lower yields in Europe are expected to translate into a move higher in yield for the US Treasury notes and visa versa.