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Friday, July 29, 2011

Keystone's 2-10 Spread Indicator

We have watched the dance above and below Keystone's key 255 spread number for weeks now. Today is the lowest number in a long time; ten year is 2.89%, two year is 0.39%. Thus, 289-39=250.

250 basis points for the spread is bad news for equity bulls; a full five bips below Keystone's key 255 number that separates happy banksters from sad banksters.  The yield courve is not advantageous for the financials once the 255 spread is lost.  A sustained move at this 250 spread and lower projects further pain for the financials.

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