Equity market activity over the past two weeks has pulled some money out of the short end of the treasury yield curve, but the most popular conduit loan index (10 Year T) continues to remain relatively flat at a yield of 4.41%, historically quite low. This is excellent news for sponsors seeking conduit financing in today’s market, as spreads for Class A stabilized income property remained relatively unchanged over the period. 5 year and 7 year rates on conduit loans have been stable as well, and the Fed’s anticipated easing seems to be priced in through December. A return to liquidity? Not yet, but we do have relative stability in the benchmarks for the moment.

TREASURIES-Bonds soften, stock rally trumps rate-cut hopes

NEW YORK, Oct 26 (Reuters) - U.S. Treasuries were flat to modestly lower in choppy trading on Friday, as a stock rally cooled safe-haven demand for low-risk bonds, trumping expectations of a Federal Reserve interest rate cut next week.Investors moved to the sidelines, taking steam out of a nearly two-week rally driven by anticipation of more monetary easing from the Fed. Treasury prices ended not far above their session lows, closing nearly unchanged on the week.

“The market seems a bit tired. It has been through a lot in the past two weeks,” said George Adell, fixed-income strategist at Commerce Capital Market in Jupiter, Florida.

Wall Street anticipates the Fed will trim the benchmark federal funds rate a quarter percentage point to 4.50 percent in order to forestall a housing-led economic slowdown, analysts said.

Despite the market’s pullback on Friday, U.S. interest rate futures markets see a rate cut next week as virtually a done deal and a follow-up in December as highly likely.

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