This is hitting the wires everywhere.
Get ready folks, here come the fireworks. Word is the bailout could be announced as soon as tomorrow. Here is the news from Bloomberg:
"Sept. 5 (Bloomberg) -- Treasuries fell amid speculation the U.S. is close to reaching a plan to help troubled mortgage finance companies Fannie Mae and Freddie Mac, easing the haven appeal of government debt.
Yields climbed after the Wall Street Journal reported that the Treasury Department could announce a plan as early as tomorrow. Bonds rallied earlier as a government report showed the economy lost jobs for an eighth consecutive month in August, increasing speculation the Federal Reserve will cut rather than raise interest rates.
``We are seeing some selling of Treasuries off of this because it creates a safer environment,'' said Glen Capelo, a Treasury trader at RBS Greenwich Capital in Greenwich, Connecticut, one of 19 primary dealers required to bid at government debt sales.
The yield on the benchmark 10-year note rose 7 basis points to 3.69 percent at 4:42 p.m. in New York, according to bond broker BGCantor Market Data. It reached 3.55 percent earlier today, the lowest since April 15. The 4 percent security due August 2018 fell 17/32, or $5.31 per $1,000 face amount, to 102 18/32.
Ten-year note yields touched the lowest in almost five months before paring gains as stocks rebounded from the worst week since May. Futures show that traders see a 9 percent chance central bankers will reduce borrowing costs by year-end, compared with 43 percent odds for an increase a month ago.
Payrolls fell by 84,000, and revisions added another 58,000 to job losses for the prior two months, the Labor Department said today in Washington. The median forecast in a Bloomberg News survey of 76 economists was for a loss of 75,000. The jobless rate jumped to 6.1 percent, matching a high reached in September 2003, from 5.7 percent the prior month."
Well it looks like the bailout is going down this weekend. Monday will be interesting. You could potentially see a wicked rally on the announcement. It all comes down to the language and what they plan on doing.
There are many questions that I have here regarding this announcement. Do the common shareholders get wiped out? What about the preferred? How does the bond market react to this. How high do the yields on the 10-year go if a bailout is announced?
It looks like yields rose just on the rumor that this was going down this weekend. This explains the big rally this afternoon on Wall St. There is not much else to say here until we see the details.
Whatever the Treasury decides to do, it does not change the fundamental problems in the housing market and the economy. Any bounce we get on this news becomes the shorting opportunity of a lifetime IMO.
This is the last big stick save! The Treasury better get it right. "Moral Hazard" is in play here folks. Next week will be historic.
Fannie/Freddie now plummeting after hours according to CNBC after initially bouncing. It looks like the common shareholders might get wiped out.
Hold on tight folks. Its gonna be a wild ride!