What were you doing in 1998?/Banking conditions survey results

Just two weeks after the Bank of England cut its bank rate to 4%, the 30 yr gilt yield yesterday closed at its highest level since 1998, rising by almost 20 bps in three days before backing off a touch today by 2 bps. Even though the ECB has cut its deposit rate by 200 bps over the past year, German and French 30 yr yields today are at 14 yr highs. I raise this for two reasons, the global bear market in bond duration continues and central bank attempts at lowering interest rates have only had an impact on short term rates. The Fed knows how this feels after they've cut 100 bps and we of course all watch to see how the long end trades from here as we are about to get some more cuts.

JGB yields, something I continue to encourage people to watch each day, rose too overnight after a mediocre 20 yr bond auction. The 40 yr yield closed up by 5 bps to near a one month high. The 30 yr yield closed within 3 bps of matching a record high since this was first issued in 1999. The 20 yr yield is less than 1 bps from a level last seen in 2000.

30 yr Gilt Yield

30 yr Bund Yield

30 yr JGB Yield

20 yr JGB Yield

Sensitive to the value of one's homes, mortgage rates and consumer confidence, Home Depot's Q2 top and bottom line both slightly missed expectations and comps were a touch light, up 1% vs the estimate of 1.4%.