Baird Advisors Fixed Income Market Commentary - August 2009

Treasury yields were volatile once again in August (10-yr. yield rose to a high of 3.85% on 8/7 from 3.48% on 7/31 and then fell to a low of 3.40% on 8/31), but finished the month slightly lower (down 5-15 bps) on concerns that declines in the Chinese stock market (down 6.8% from 8/11 to 8/31) would spread around the globe. The decline in yields came in the face very heavy new supply: the Treasury auctioned over $198 billion of notes and bonds and $624 billion of bills during the month of August. The shape of the curve did not change appreciably in August, but has clearly steepened so far this year

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