Treasuries gained for a second day after comments from Federal Reserve Chairman Ben S. Bernanke increased speculation the central bank is preparing to boost purchases of U.S. government debt.
Two-year yields were about one basis point away from a record low after Bernanke said the central bank’s first round of so-called quantitative easing improved the economy and additional buying will probably help more. Pacific Investment Management Co., which runs the world’s biggest mutual fund, said the Fed will probably expand its buying program as it tries to revive a U.S. economy that is almost stalled.
“They’re laying the groundwork for more quantitative easing” in the U.S., said Peter Jolly, the Sydney-based head of market research for the investment-banking unit of National Australia Bank Ltd., the nation’s largest lender by assets. “The initial impact has to be lower yields.”
The yield on the benchmark 10-year note dropped two basis points to 2.46 percent as of 1:09 p.m. in Tokyo, according to BGCantor Market Data. The 2.625 percent security due in August 2020 gained 5/32, or $1.56 per $1,000 face amount, to 101 13/32.
Two-year notes yielded 0.41 percent, compared with the record low of 0.3987 percent set yesterday.
“The additional purchases -- although we don’t have precise numbers for how big the effects are -- I do think they have the ability to ease financial conditions,” Bernanke said yesterday at a forum with college students in Providence, Rhode Island. He said the first wave that ended in March was an “effective program.”
Fed Buying
The Fed snapped up $300 billion of Treasuries last year.
The central bank said in August it would reinvest proceeds from maturing mortgage holdings into government debt. It is scheduled to buy Treasuries due from September 2016 to August 2020 today and from March 2013 to August 2014 tomorrow.
Now policy makers are debating whether to add securities to the central bank balance sheet with additional purchases.
“A new round of quantitative easing is likely,” McCulley, who is based in Newport Beach, California, wrote in a report on Pimco’s website. “The bottom line for the U.S. is a growth trajectory so slow you’d nearly call it stalled.” McCulley published his report before Bernanke spoke.
U.S. government securities also rose after the Reserve Bank of Australia refrained from raising borrowing costs at a meeting today. Nineteen of 25 economists surveyed by Bloomberg News predicted an increase.
Australian one-year yields dropped 11 basis points to 4.61 percent, the biggest decline since May, according to data compiled by Bloomberg.
To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
http://jodnet.blogspot.com
Two-year yields were about one basis point away from a record low after Bernanke said the central bank’s first round of so-called quantitative easing improved the economy and additional buying will probably help more. Pacific Investment Management Co., which runs the world’s biggest mutual fund, said the Fed will probably expand its buying program as it tries to revive a U.S. economy that is almost stalled.
“They’re laying the groundwork for more quantitative easing” in the U.S., said Peter Jolly, the Sydney-based head of market research for the investment-banking unit of National Australia Bank Ltd., the nation’s largest lender by assets. “The initial impact has to be lower yields.”
The yield on the benchmark 10-year note dropped two basis points to 2.46 percent as of 1:09 p.m. in Tokyo, according to BGCantor Market Data. The 2.625 percent security due in August 2020 gained 5/32, or $1.56 per $1,000 face amount, to 101 13/32.
Two-year notes yielded 0.41 percent, compared with the record low of 0.3987 percent set yesterday.
“The additional purchases -- although we don’t have precise numbers for how big the effects are -- I do think they have the ability to ease financial conditions,” Bernanke said yesterday at a forum with college students in Providence, Rhode Island. He said the first wave that ended in March was an “effective program.”
Fed Buying
The Fed snapped up $300 billion of Treasuries last year.
The central bank said in August it would reinvest proceeds from maturing mortgage holdings into government debt. It is scheduled to buy Treasuries due from September 2016 to August 2020 today and from March 2013 to August 2014 tomorrow.
Now policy makers are debating whether to add securities to the central bank balance sheet with additional purchases.
“A new round of quantitative easing is likely,” McCulley, who is based in Newport Beach, California, wrote in a report on Pimco’s website. “The bottom line for the U.S. is a growth trajectory so slow you’d nearly call it stalled.” McCulley published his report before Bernanke spoke.
U.S. government securities also rose after the Reserve Bank of Australia refrained from raising borrowing costs at a meeting today. Nineteen of 25 economists surveyed by Bloomberg News predicted an increase.
Australian one-year yields dropped 11 basis points to 4.61 percent, the biggest decline since May, according to data compiled by Bloomberg.
To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
http://jodnet.blogspot.com
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