Ted Weisman*
Treasuries were pounded by an unprecedented flood of $94 billion in coupon supply over the past week, with the belly of the curve taking heavy losses, even as economic data remained uniformly abysmal, the stock market fell to new lows, and other risk markets mostly also deteriorated to varying extents, with a severe correction in commercial real estate particularly disturbing. Investors in risk markets appear to have largely lost faith in the government’s ability to revive the economy or financial system, while investors in Treasuries expect the government will continue to spend ever increasing amounts of money trying to do so to little effect, keeping issuance at its record, shattering recent rates. Certainly nothing happened over the past week to raise investors’ confidence in government policy. We’ve still heard nothing more about the bad bank plan, massive tax increases including on dividends and capital gains were announced in the middle of an equity market severe correction and what will likely end up being the worst recession since the 1930s, the new ‘Capital Assistance Program’ to buy convertible preferred stock in banks had punitive terms that made it unlikely any company would want to participate that wasn’t forced to as a result of failing its stress test, the latest effort to support Citigroup was terribly received by the market, and there’s still no TALF, so the February timeline for implementing this program announced months ago has now been missed...(cont'd)*Ted Wieseman is a Morgan Stanley Vice President and an economist focusing on US fixed income markets. Ted works with Chief US Fixed Income Economist David Greenlaw on Federal Reserve and US Treasury analysis and economic data forecasting and analysis, supporting the firm's Treasury, agency, and derivatives sales, and trading operations. Before joining Morgan Stanley in 1998, Ted worked for three years at Citibank, primarily focusing on foreign exchange economics.
Ted holds an M.A. in economics from New York University and a B.A. in economics with a minor in mathematics from the University of North Carolina at Chapel Hill. He also did graduate work in economics at Yale University.
