Connections

More evidence of narrowing interest rate spreads in developing countries. Look for the BOJ to raise, the Euro and UK area to lower, and for the U.S. to pause.

Price actions (again, news follows price and this is no exception) have already presaged these movements, with the U.S. dollar leading the way.

Two-Year Treasury Notes Fall on Bets Fed Cuts Almost at an End
2008-04-26 08:00 (New York)


By Daniel Kruger and Sandra Hernandez

April 26 (Bloomberg) -- Treasuries fell this week,
pushing two-year note yields to the highest since January,
on mounting speculation the Federal Reserve will halt its
cycle of interest-rate reductions as soon as this month's
policy meeting.

Ten-year note yields climbed a fifth straight week as
crude oil set a record high, fanning concern that rising
prices for food and energy will cause inflation to
accelerate. Traders in interest-rate futures see about a 25
percent chance the Fed will keep its main rate unchanged at
2.25 percent on April 30 after six rate cuts since
September.

``What we're seeing now is a big shift in market
sentiment regarding the Fed,'' said Gary Pollack, who helps
oversee $12 billion as head of fixed-income trading at
Deutsche Bank AG's Private Wealth Management unit in New
York. ``The feeling is the Fed may pause after it meets
next week.''