Treasuries Unchanged in Asia, Developments Eyed

The United States Treasuries remain unchanged in Asia on Friday as investors await the next dramatic developments that may happen in the financial sector.  Investors are largely uncertain as to how the U.S. financial sector will turn out as they eye flashpoints that could have significant impact on the unfolding drama.  

Treasuries Shaken

The Treasuries were slightly shaken on Thursday as U.S. stocks make a move upwards riding on the report published by the Wall Street Journal.  The Wall Street Journal reported that Lehman Brothers, the beleaguered U.S. investment bank, was deep in negotiations with potential buyers that can salvage the company.  The report named some of the big banking institutions in the U.S. including the Bank of America.  

A similar report was also published by the Washington Post on Thursday also saying that the United States Federal Bank and the Treasury Department were planning a sale formula for the Lehman Brothers.  The report indicated that the two financial agencies of the U.S. are carefully engineering the auction of the investment bank by attracting into the sale several consortium of private investment and banking firms.

Another Big Name Falls

Surprisingly, as the smoke over Lehman has not subsided yet, another big name financial company came into the picture and added uncertainties in the financial market.  This development put another jolt to the already queasy sentiments of market participants as they stand down thus preventing a sharp fall and decline of bond prices.

Washington Mutual Inc., one of the biggest savings and loan companies in the United States, got an investment grade downgrade from the Moody’s Investors Service.  The downgraded rating came at the heels of Washington Mutual’s inability to tap resources in the capital market to improve its liquidity.  

The week proved to be a defining moment for the U.S. financial market as it unfolded significant moves of the government.  This week, news of an outright take-over and buy out of the U.S. government on Fannie Mae and Freddie Mac came through.  This development further swayed the Treasuries which are being closely watched by market participants. Fannie Mae and Freddie Mac are large mortgage lenders in the United States.

Notes Remain Unchanged

Late U.S. trading saw the benchmark rate for the ten-year note unchanged as its price didn’t move to yield at a steady 3.640 percent.  Likewise, the two-year note yielded 2.215 percent and also not moving in the face of fresh developments.

The bonds market should prepare however for further dents as analysts said new waves of developments could significantly impact on its movement.  This scenario will continue as the general picture of the U.S. financial sector remains uncertain.

If U.S. Secretary of Treasury Henry Paulson could make a solid and convincing argument on the benefits of the buy out package done on Fannie Mae and Freddie Mac, more buy outs and rescue attempts on GSE’s could move and become the next chapter in the unfolding drama.