At the close of a memorable week, fixed income trading has settled down. On the one hand, the S&P downgrade triggered the most volatile market in a year and precipitated the sharpest decline for stocks in three-years. In part its move prompted the Fed to pull a new card from its sleeve as it declared at least a two-year freeze on interest rate policy. The drama also weakened investors' appetite for fresh government debt culminating in a weaker expression of interest at Thursday's auction of long bonds.
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