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The U.S. Treasury market is advancing on a number of factors, some of which would likely spur a significant advance if they developed further, although this is not yet in sight. The best bet is for stability in bonds -- no moon shot -- because many of the factors that recently drove yields higher are still in place. Here are seven factors boosting Treasuries:
Rally in European bonds: Weaker-than-expected readings on investor sentiment over the economic outlook in Germany and for the European community helped spur gains in European bonds, where yields are down between 4-6 basis points. Both the German and European ZEW surveys were weaker than expected (the ZEW is a survey of several hundred institutional investors).
Housing: Recent data on housing have been glum, particularly the monthly Housing Market Index released Monday from the National Association of Home Builders. Nothing gets the bond market going better than weak housing data.Subprime anxieties have returned: ABX indices have been weaker and many are talking about a new leg lower and increased fallout from the subprime market. Credit spreads wider: Corporate credit spreads are said wider in the investment-grade arena on the heels of weakness in Expedia's credit default swaps, where the cost of protecting $10 million of Expedia's debt increased to $189,000 from $70,000 yesterday, according to Bloomberg based on data from CMA Datavision.