Rick Santelli Brief Intro
Rick Santelli has been the Editor for CNBC Business News network since 1999 and is known for reporting from the floor of the Chicago Board of Trade, focusing on topics such as interest rates, foreign exchange, and the Federal Reserve’s analysis on the U.S. economy.
Bond Market Concepts Explained
30-Year Treasuries are long-term debt securities issued by the U.S. Treasury to finance government spending. Yield inversely relates to the bond’s price: as the price goes up, the yield goes down, and vice versa. “Tailing” and “Stopping Through” refer to auction-related scenarios. The bid-to-cover ratio compares the total value of bids received in the auction to the amount of securities offered for sale. Indirect and Direct Bidders reveal market demand and confidence.
Summary of Santelli’s Report
Santelli summarized the week’s bond auctions, highlighting that the final auction involved the sale of $25 billion in 30-year Treasury bonds and the 30-year bond auction achieved a yield of 4.36%. The auction had a bid-to-cover ratio that matched the ten-auction average, indicating healthy demand. Despite the auction’s success, Santelli pointed out a key market indicator to watch: the high yield close for 30-year bonds in 2024, which was 4.41% at that time.
Insight from Jeffrey Rosenberg
Jeffrey Rosenberg, a senior portfolio manager at BlackRock Inc., offered his perspective following the release of the January jobs report and the outcome of the Federal Reserve’s recent FOMC meeting. He advised against making hasty judgments based on the initial reaction to the jobs report, emphasizing the need to analyze deeper factors and highlighted the typical seasonality of the January jobs report. Rosenberg discussed the broader implications for the labor market and interpreted the Federal Reserve’s response strategy, based on the recent news conference.
Rosenberg showed a preference for the shorter end of the US Treasury curve, influenced by the recent economic indicators and the Fed’s policy direction, and cautioned that the longer end is susceptible to rises in term and inflation premiums.
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