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Monday, August 9, 2010

Rosenberg Daily - Bond rally good for corporate America

Look at what the bond market is doing for the economy; it is driving mortgage rates down to new all-time lows of 4.5%. The rally in Treasuries, which for some reason so many market pundits resist, has also played a crucial role in revitalizing the corporate financial backdrop. The 100 basis point decline in AAA-rated company bonds in the past 12 months, to a 40-year low of 4.72%, didn’t happen all on its own. The downdraft in government bond yields — a welcome downdraft — has played a vital part in dramatically cutting into debt- service expense across the business sector. The yield on the 5-year TIPS is close to zero, which is another indication that inflation concerns right now have been completely swept under the rug
---Rosenberg, 8/9

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