U.S. Treasury bonds have risen for a second straight day amid speculation that subprime mortgage loan securities losses will increase, reports Bloomberg News. According to James Collins, a Citigroup Global Markets analyst, the market is waiting for the other shoe to drop in mortgage-backed securities.
The market has otherwise been healthy with the Dow Jones Industrial Average hitting a record high and the Standard & Poor’s 500 Index slipping 0.2% from a record. “As long as there's not spillover or contagion into the broader market, this is just a repricing of lower-quality risk products,” said James Caron, head of U.S. interest-rate strategy at Morgan Stanley in New York.