Treasuries gained, sending two-year note yields to a record low, as traders speculated minutes of the Federal Reserve’s September meeting will indicate policy makers are preparing to step up debt purchases.
The 10-year note yield was near the lowest level since January 2009 after Goldman Sachs Group Inc. said September job losses “put the seal on” the case for the Fed to increase bond buys, a move known as quantitative easing. Today’s $32 billion sale of three-year debt, the first of three auctions this week of $66 billion of notes and bonds -- was poised to draw a record low yield.
“This week people will be concentrating on the supply, more evidence regarding quantitative easing and any surprises from the FX markets, given the recent decline of the dollar,” said Paul Horrmann, a broker in New York at Tradition Asiel Securities Inc., an interdealer broker. “The Fed is still keeping the market from selling anything in the front end, which supports the three-year auction.”
The yield on the 10-year note fell three basis points, or 0.03 percentage point, to 2.37 percent at 9:28 a.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in August 2020 rose 7/32, or $2.19 per $1,000 face amount, to 102 7/32. The rate dropped to 2.33 percent on Oct. 8, the lowest level since January 2009.
Two-year yields extended their decline to record lows, falling to 0.327 percent today before trading at 0.34 percent. The 30-year bond yield dropped 2 basis points to 3.73 percent.
Treasuries pared gains as stocks trimmed losses, with the Stoxx Europe 600 Index of European equities slipping 0.2 percent and futures on the Standard & Poor’s 500 Index falling 0.3 percent. The dollar gained versus 10 of its 16 most-traded counterparts after falling against all of them last week.
‘Additional Accommodation’
Treasuries rallied on Sept. 21, when the central bank said in a statement following the Federal Open Market Committee meeting that it’s prepared “to provide additional accommodation if needed to support economic recovery and to return inflation, over time, to levels consistent with its mandate.”
The Fed will probably announce about $500 billion of purchases that will last through about the middle of next year at a meeting next month, Jan Hatzius, chief U.S. economist at Goldman Sachs in New York, said to clients via e-mail. The firm is one of 18 primary dealers that trade with the central bank.
A Labor Department report Oct. 8 showing 95,000 jobs eliminated in September will prompt the central bank to buy bonds, Hatzius wrote.
“Friday’s jobs numbers put the seal on a quantitative easing announcement at the Nov. 2-3 FOMC meeting,” according to Goldman Sachs.
Break-Even Rate
The difference between yields on 30-year bonds and Treasury Inflation Protected Securities narrowed for the first time since Sept. 30. The break-even rate, a measure of inflation expectations over the life of the maturity, slid 0.12 percentage point to 2.22 percentage points.
Janet Yellen, in her first public remarks as the Fed vice chairman, said low interest rates may give firms the incentive to engage in excessive risk-taking.
“It is conceivable that accommodative monetary policy could provide tinder for a buildup of leverage and excessive risk-taking in the financial system,” she said in a speech yesterday.
The three-year notes scheduled for sale today yielded 0.547 percent in pre-auction trading, which would be the least ever. The rate was 0.79 percent at the previous sale of the securities on Sept. 7.
Investors bid for 3.21 times the amount of available debt last month. The average bid-to-cover ratio of the past 10 auctions is 3.12. Indirect bidders, which include foreign central banks, bought 42.4 percent of the securities, versus the 10-sale average of 47.5 percent.
‘Mere Speed Bumps’
The U.S. will also sell $21 billion of 10-year notes tomorrow and $13 billion of 30-year bonds Oct. 14.
Reports this week are forecast in Bloomberg News surveys to show producer and consumer prices remained benign in September, according to economists surveyed by Bloomberg.
The auctions and this week’s data “are mere speed bumps on the road as we hurdle inexorably toward the Nov. 3 FOMC meeting and a second round of large-scale asset purchases by the Fed,” William O’Donnell, head of U.S. government bond strategy at primary dealer Royal Bank of Scotland Group Plc in Stamford, Connecticut, wrote in a note to clients.
For investors in Japan coping with record-low rates, U.S. debt is relatively cheap. Ten-year Treasuries yield 1.49 percentage points more than similar-maturity Japanese government bonds, up from 0.82 percentage point in December 2008.
Japan is poised to pass China as the largest U.S. creditor for the first time since August 2008 as growing demand for U.S. debt reduces borrowing costs for President Barack Obama.
‘Quite Attractive’
“Treasuries are quite attractive, especially from the view of Japanese investors, because there still is a yield,” said Satoshi Okumoto, a general manager in Tokyo at Fukoku Mutual Life Insurance Co., whose firm has the equivalent of $66.4 billion in assets.
Investors in a survey by Ried Thunberg ICAP Inc., a unit of the world’s largest inter-dealer broker, became more bearish on the outlook for Treasuries through the end of December.
Ried’s sentiment index fell to 45 for the seven days ended Oct. 8 from 47 the week before. A figure less than 50 indicates that investors expect prices to fall.
http://jodnet.blogspot.com
The 10-year note yield was near the lowest level since January 2009 after Goldman Sachs Group Inc. said September job losses “put the seal on” the case for the Fed to increase bond buys, a move known as quantitative easing. Today’s $32 billion sale of three-year debt, the first of three auctions this week of $66 billion of notes and bonds -- was poised to draw a record low yield.
“This week people will be concentrating on the supply, more evidence regarding quantitative easing and any surprises from the FX markets, given the recent decline of the dollar,” said Paul Horrmann, a broker in New York at Tradition Asiel Securities Inc., an interdealer broker. “The Fed is still keeping the market from selling anything in the front end, which supports the three-year auction.”
The yield on the 10-year note fell three basis points, or 0.03 percentage point, to 2.37 percent at 9:28 a.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in August 2020 rose 7/32, or $2.19 per $1,000 face amount, to 102 7/32. The rate dropped to 2.33 percent on Oct. 8, the lowest level since January 2009.
Two-year yields extended their decline to record lows, falling to 0.327 percent today before trading at 0.34 percent. The 30-year bond yield dropped 2 basis points to 3.73 percent.
Treasuries pared gains as stocks trimmed losses, with the Stoxx Europe 600 Index of European equities slipping 0.2 percent and futures on the Standard & Poor’s 500 Index falling 0.3 percent. The dollar gained versus 10 of its 16 most-traded counterparts after falling against all of them last week.
‘Additional Accommodation’
Treasuries rallied on Sept. 21, when the central bank said in a statement following the Federal Open Market Committee meeting that it’s prepared “to provide additional accommodation if needed to support economic recovery and to return inflation, over time, to levels consistent with its mandate.”
The Fed will probably announce about $500 billion of purchases that will last through about the middle of next year at a meeting next month, Jan Hatzius, chief U.S. economist at Goldman Sachs in New York, said to clients via e-mail. The firm is one of 18 primary dealers that trade with the central bank.
A Labor Department report Oct. 8 showing 95,000 jobs eliminated in September will prompt the central bank to buy bonds, Hatzius wrote.
“Friday’s jobs numbers put the seal on a quantitative easing announcement at the Nov. 2-3 FOMC meeting,” according to Goldman Sachs.
Break-Even Rate
The difference between yields on 30-year bonds and Treasury Inflation Protected Securities narrowed for the first time since Sept. 30. The break-even rate, a measure of inflation expectations over the life of the maturity, slid 0.12 percentage point to 2.22 percentage points.
Janet Yellen, in her first public remarks as the Fed vice chairman, said low interest rates may give firms the incentive to engage in excessive risk-taking.
“It is conceivable that accommodative monetary policy could provide tinder for a buildup of leverage and excessive risk-taking in the financial system,” she said in a speech yesterday.
The three-year notes scheduled for sale today yielded 0.547 percent in pre-auction trading, which would be the least ever. The rate was 0.79 percent at the previous sale of the securities on Sept. 7.
Investors bid for 3.21 times the amount of available debt last month. The average bid-to-cover ratio of the past 10 auctions is 3.12. Indirect bidders, which include foreign central banks, bought 42.4 percent of the securities, versus the 10-sale average of 47.5 percent.
‘Mere Speed Bumps’
The U.S. will also sell $21 billion of 10-year notes tomorrow and $13 billion of 30-year bonds Oct. 14.
Reports this week are forecast in Bloomberg News surveys to show producer and consumer prices remained benign in September, according to economists surveyed by Bloomberg.
The auctions and this week’s data “are mere speed bumps on the road as we hurdle inexorably toward the Nov. 3 FOMC meeting and a second round of large-scale asset purchases by the Fed,” William O’Donnell, head of U.S. government bond strategy at primary dealer Royal Bank of Scotland Group Plc in Stamford, Connecticut, wrote in a note to clients.
For investors in Japan coping with record-low rates, U.S. debt is relatively cheap. Ten-year Treasuries yield 1.49 percentage points more than similar-maturity Japanese government bonds, up from 0.82 percentage point in December 2008.
Japan is poised to pass China as the largest U.S. creditor for the first time since August 2008 as growing demand for U.S. debt reduces borrowing costs for President Barack Obama.
‘Quite Attractive’
“Treasuries are quite attractive, especially from the view of Japanese investors, because there still is a yield,” said Satoshi Okumoto, a general manager in Tokyo at Fukoku Mutual Life Insurance Co., whose firm has the equivalent of $66.4 billion in assets.
Investors in a survey by Ried Thunberg ICAP Inc., a unit of the world’s largest inter-dealer broker, became more bearish on the outlook for Treasuries through the end of December.
Ried’s sentiment index fell to 45 for the seven days ended Oct. 8 from 47 the week before. A figure less than 50 indicates that investors expect prices to fall.
http://jodnet.blogspot.com
0 التعليقات
Post a Comment