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Treasury Two-Year Yield Near Three-Week High Before Record Sale
http://www.bloomberg.com/apps/news?pid=20601009&sid=aR885V.fwcBw&refer=bond#
By Dakin Campbell and Kim-Mai Cutler
Jan. 27 (Bloomberg) -- Treasury two-year notes were little changed, with yields near the highest level in almost three weeks, before the U.S. sells a record $40 billion of the securities today to help finance an economic recovery.
Government debt tumbled 2.2 percent in January so far, according to a Merrill Lynch & Co. index, as the U.S. is expected to sell almost $150 billion in coupon securities in the next three weeks. The Federal Reserve begins a two-day meeting to decide the next step in monetary policy aimed at lifting the economy out of recession.
“We’ll be looking at two-year notes today and what the Fed comes out with tomorrow,” said John Spinello, chief technical strategist in New York at Jefferies Group Inc. “Maybe they will clarify to some extent the need to buy Treasuries, but I don’t think that’s in the cards.”
The two-year note yield rose one basis point, or 0.01 percentage point, to 0.85 percent at 9:09 a.m. in New York, according to BGCantor Market Data. The 0.875 percent security maturing in December 2010 fell 1/32, or 31 cents per $1,000 face amount, to 100 1/32. The yield is below the five-year average of 3.46 percent.
The last sale of two-year securities on Dec. 22 yielded 0.922 percent. Investors bid for 2.13 times the amount offered at the auction. The average ratio for the past 10 sales is 2.31.
Ten-year yields fell one basis point to 2.62 percent today.
Home prices in 20 U.S. cities declined 18.2 percent in November from a year earlier, the fastest drop on record, the S&P/Case-Shiller index showed today. The Conference Board index of consumer sentiment was probably near its lowest ever in January, according to a Bloomberg News survey of economists before the report, which is due at 10 a.m.
Jump in Borrowing
Goldman Sachs Group Inc., one of the 17 primary dealers that trade with the Fed, said last week the U.S. will probably borrow a record $2.5 trillion this fiscal year ending Sept. 30, versus $892 billion in notes and bonds sold in the prior 12 months.
“The underlying issue is supply,” said Giles Gale, a London-based fixed-income strategist at Royal Bank of Scotland Group Plc, the world’s fourth-biggest bond trader. “Investors are really tuned into it at the moment.”
The MSCI World Index of shares rose 0.7 percent and futures on the Standard & Poor’s 500 Index were up 1 percent, denting demand for the safety of government assets.
The last time Treasuries fell so much was in April 2004, handing investors a 3.2 percent loss, according to the Merrill Lynch index. Debt declined that month as signs of accelerating inflation led traders to increase bets the Fed would raise interest rates.
Inflation Expectations
Inflation expectations increased this month as President Barack Obama sought approval in Congress for his $825 billion economic plan.
The difference between rates on 10-year notes and Treasury Inflation Protected Securities, which reflects the outlook among traders for consumer prices, widened to 78 basis points from minus eight basis points in November. The average for the past decade is 2.11 percentage points.
The real yield, what investors get after inflation is taken into account, was 2.56 percent on 10-year notes, near the highest level in 16 months. Consumer prices increased 0.1 percent in 2008, after rising 4.1 percent the previous year.
Bets on Fed
Two-year yields were within a quarter of a percentage point of the record low set last month as traders bet the Fed will refrain from raising interest rates when it completes a two-day meeting tomorrow.
Fed Chairman Ben S. Bernanke trimmed the target for overnight lending between banks to a range of zero to 0.25 percent at the last meeting on Dec. 16 to spur the economy. Traders see 84 percent odds that policy makers will keep the range unchanged this week, and no chance of an increase, futures contracts on the Chicago Board of Trade show.
Caterpillar Inc., Sprint Nextel Corp., Home Depot Inc. and ING Groep NV all announced job cuts yesterday.
“The economy will recover, but not strongly,” said Shuhei Mochizuki, Tokyo-based assistant manager in the foreign-bond section at Sumitomo Life Insurance Co., which oversees the equivalent of $33.6 billion in non-Japanese debt. “People are buying Treasuries for safety.”
Ten-year yields will fall to 2 percent by year-end, he said.
Yields indicate central bank and government attempts to restore trading in frozen credit markets haven’t been as effective this year as in 2008, providing further reason to favor the relative safety of government debt. The London interbank offered rate, or Libor, for three-month dollar loans was little changed at 1.18 percent today, the highest level since Jan. 9.
Mortgage Rates
Even as the Fed cut its target interest rate, 30-year fixed-rate mortgages averaged 5.12 percent last week, according to mortgage finance company Freddie Mac in McLean, Virginia, or 2.50 percentage points more than 10-year Treasuries. The spread averaged about 1.86 percentage points since the start of 2000.
In short-term lending, the $1.69 trillion commercial paper market may be the first to cut its reliance on federal bailout programs.
About $245 billion of 90-day commercial paper that companies sold to the Fed starting in October will mature this week and next, central bank data show. As much as $50 billion to $70 billion of the debt may be rolled over and bought by investors, according to Barclays Capital in New York.
http://www.bloomberg.com/apps/news?pid=20601009&sid=aR885V.fwcBw&refer=bond#
By Dakin Campbell and Kim-Mai Cutler
Jan. 27 (Bloomberg) -- Treasury two-year notes were little changed, with yields near the highest level in almost three weeks, before the U.S. sells a record $40 billion of the securities today to help finance an economic recovery.
Government debt tumbled 2.2 percent in January so far, according to a Merrill Lynch & Co. index, as the U.S. is expected to sell almost $150 billion in coupon securities in the next three weeks. The Federal Reserve begins a two-day meeting to decide the next step in monetary policy aimed at lifting the economy out of recession.
“We’ll be looking at two-year notes today and what the Fed comes out with tomorrow,” said John Spinello, chief technical strategist in New York at Jefferies Group Inc. “Maybe they will clarify to some extent the need to buy Treasuries, but I don’t think that’s in the cards.”
The two-year note yield rose one basis point, or 0.01 percentage point, to 0.85 percent at 9:09 a.m. in New York, according to BGCantor Market Data. The 0.875 percent security maturing in December 2010 fell 1/32, or 31 cents per $1,000 face amount, to 100 1/32. The yield is below the five-year average of 3.46 percent.
The last sale of two-year securities on Dec. 22 yielded 0.922 percent. Investors bid for 2.13 times the amount offered at the auction. The average ratio for the past 10 sales is 2.31.
Ten-year yields fell one basis point to 2.62 percent today.
Home prices in 20 U.S. cities declined 18.2 percent in November from a year earlier, the fastest drop on record, the S&P/Case-Shiller index showed today. The Conference Board index of consumer sentiment was probably near its lowest ever in January, according to a Bloomberg News survey of economists before the report, which is due at 10 a.m.
Jump in Borrowing
Goldman Sachs Group Inc., one of the 17 primary dealers that trade with the Fed, said last week the U.S. will probably borrow a record $2.5 trillion this fiscal year ending Sept. 30, versus $892 billion in notes and bonds sold in the prior 12 months.
“The underlying issue is supply,” said Giles Gale, a London-based fixed-income strategist at Royal Bank of Scotland Group Plc, the world’s fourth-biggest bond trader. “Investors are really tuned into it at the moment.”
The MSCI World Index of shares rose 0.7 percent and futures on the Standard & Poor’s 500 Index were up 1 percent, denting demand for the safety of government assets.
The last time Treasuries fell so much was in April 2004, handing investors a 3.2 percent loss, according to the Merrill Lynch index. Debt declined that month as signs of accelerating inflation led traders to increase bets the Fed would raise interest rates.
Inflation Expectations
Inflation expectations increased this month as President Barack Obama sought approval in Congress for his $825 billion economic plan.
The difference between rates on 10-year notes and Treasury Inflation Protected Securities, which reflects the outlook among traders for consumer prices, widened to 78 basis points from minus eight basis points in November. The average for the past decade is 2.11 percentage points.
The real yield, what investors get after inflation is taken into account, was 2.56 percent on 10-year notes, near the highest level in 16 months. Consumer prices increased 0.1 percent in 2008, after rising 4.1 percent the previous year.
Bets on Fed
Two-year yields were within a quarter of a percentage point of the record low set last month as traders bet the Fed will refrain from raising interest rates when it completes a two-day meeting tomorrow.
Fed Chairman Ben S. Bernanke trimmed the target for overnight lending between banks to a range of zero to 0.25 percent at the last meeting on Dec. 16 to spur the economy. Traders see 84 percent odds that policy makers will keep the range unchanged this week, and no chance of an increase, futures contracts on the Chicago Board of Trade show.
Caterpillar Inc., Sprint Nextel Corp., Home Depot Inc. and ING Groep NV all announced job cuts yesterday.
“The economy will recover, but not strongly,” said Shuhei Mochizuki, Tokyo-based assistant manager in the foreign-bond section at Sumitomo Life Insurance Co., which oversees the equivalent of $33.6 billion in non-Japanese debt. “People are buying Treasuries for safety.”
Ten-year yields will fall to 2 percent by year-end, he said.
Yields indicate central bank and government attempts to restore trading in frozen credit markets haven’t been as effective this year as in 2008, providing further reason to favor the relative safety of government debt. The London interbank offered rate, or Libor, for three-month dollar loans was little changed at 1.18 percent today, the highest level since Jan. 9.
Mortgage Rates
Even as the Fed cut its target interest rate, 30-year fixed-rate mortgages averaged 5.12 percent last week, according to mortgage finance company Freddie Mac in McLean, Virginia, or 2.50 percentage points more than 10-year Treasuries. The spread averaged about 1.86 percentage points since the start of 2000.
In short-term lending, the $1.69 trillion commercial paper market may be the first to cut its reliance on federal bailout programs.
About $245 billion of 90-day commercial paper that companies sold to the Fed starting in October will mature this week and next, central bank data show. As much as $50 billion to $70 billion of the debt may be rolled over and bought by investors, according to Barclays Capital in New York.
... porcaccia non c'è pace per chi va long di oil in questo periodo. 
cmq son proprio defi a fare così di punto in bianco senza preavviso, brutto segno