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China Raises Benchmark Lending Rate
02/08/2011
China raised the benchmark one-year lending rate from 5.81% to 6.06%, the third increase since mid-October, due to the highest inflation in the last 30 months. Stock futures are hovering around unchanged; commodities are lower; Treasuries and mortgages are down. The Treasury is scheduled to auction $32B of 3yr notes today, $24B of 10yr notes tomorrow, and $16B of 30yr bonds on Thursday. Right now, the futures market is pricing in an 85% chance that the Fed keeps rates between 0% and 0.25% through April 27th, 2011. Currently, the Ten Year yield is at 3.66% (3.66% yesterday) and the 2-10 yield spread is at 287bps, flattening 2bps since yesterday morning.
