iniziano ad arrivare le megaaste
U.S. 2-Year Note Yields Increase Before Record $38 Billion Sale
http://www.bloomberg.com/apps/news?pid=20602007&sid=ayWWmstNT02M&refer=govt_bonds#
By Daniel Kruger and Dakin Campbell
Dec. 22 (Bloomberg) -- Two-year Treasury notes declined for a second day as traders prepared for a record $38 billion auction of the securities, with yields near all-time lows.
Treasuries of all maturities fell as a gauge of banks’ willingness to lend slipped below 150 basis points for the first time since the collapse of Lehman Brothers Holdings Inc. in September amid speculation interest rates near zero and promises of more government cash will help thaw credit. The U.S. will sell $28 billion of five-year notes tomorrow, another record.
“We know the economic data is going to continue to show weakness, Congress is going to bail out the auto companies,” said
Theodore Ake, head of U.S. Treasury trading at Mizuho Securities USA Inc. in New York, one of 17 primary dealers that trade with the Federal Reserve. “The only thing we don’t know is how many people will be around to take down the supply. We’re looking at very thin markets.”
The two-year note yield rose four basis points, or 0.04 percentage point, to 0.79 percent at 11:02 a.m. in New York, according to BGCantor Market Data. It dropped to a record low of 0.60 percent on Dec. 17, from a peak this year of 3.11 percent on June 13. The price of the 1.25 percent security due in November 2010 fell 2/32, or 63 cents per $1,000 face amount, to 100 28/32.
The benchmark 10-year note yield increased four basis points to 2.17 percent. It touched 2.04 percent on Dec. 18, the lowest level since at least 1953, when records began. The yield on the 30-year bond climbed seven basis points to 2.62 percent.
TED Spread Narrows
Treasuries of all maturities have gained 14.7 percent this year, and 9.8 percent since October, as the effect of the financial crisis on the economy has grown. The U.S. lost 1.26 million job losses since August, according to the Labor Department. The economy has shed 1.91 million jobs this year.
The TED spread, the difference between the London interbank offered rate, or Libor, that banks charge each other for three- month loans and Treasury bill rates, narrowed to 148 basis points, the lowest since it was 135 basis points on Sept. 12, the last trading day before the Lehman collapse.
The U.S. Treasury sold $36 billion of two-year notes on Nov. 24 at a yield of 1.269 percent, the lowest level since June 2003, when it reached 1.179 percent. Treasuries fell that day after investors bid for 2.08 times the securities offered, compared with 2.49 times at the prior two-year sale on Oct. 28.
Government securities declined before reports this week that may show consumer spending fell in November for a record fifth month, while home sales and orders for durable goods also dropped.
‘Not Sustainable’
Consumer purchases slid 0.7 percent last month, according to the median estimate of economists surveyed by Bloomberg News ahead of a Commerce Department report Dec. 24. Sales of new homes, due to be announced tomorrow, declined to an annual pace of 415,000, the fewest in 17 years, a separate survey showed.
The
difference in yield, or spread, between two- and 10- year notes narrowed for the eighth straight day to 1.38 percentage points, the least since Sept. 8. It was at 1.94 percentage points at the end of last month and reached a five- year high of 2.62 points on Nov. 13.
The 14.7 percent return on U.S. government debt in 2008 is the most in a year since 1995, according to Merrill Lynch & Co.’s U.S. Treasury Master Index. The
Standard & Poor’s 500 Index of equities has plunged 40 percent in 2008, poised for its biggest yearly drop since 1931.
Recent gains on 10-year Treasuries are “not sustainable” and may undergo a “substantial reversal” in the first quarter of 2009, according to Barclays Capital Inc., another primary dealer.
Flight to Safety
“For the very short term we maintain a bullish focus, allowing for a push toward 2 percent,” a team led by
Jordan Kotick, global head of technical strategy at Barclays in New York, wrote in a research note today. “Into the first quarter of 2009, however, we look for a substantial reversal.”
The world’s biggest bond investors can’t stop buying
Treasuries even though yields are approaching zero and the government is preparing to sell a record amount of debt to pay for the swelling
budget deficit.
The worst economy since World War II and credit-market losses exceeding $1 trillion mean yields may continue to decline as investors flee all but the safest securities. Investors were willing to lend money to the Treasury at zero percent interest this month to safeguard their principal from wider losses.
‘Pragmatic Approach’
“I’d like to think that what I am doing is taking a pragmatic approach,” said
Wan-Chong Kung, a money manager who helps oversee $76 billion in fixed-income assets at FAF Advisors in Minneapolis. “It sounds like quite the chicken thing to do, but right now being brave seems too darn close to being perilous,” said Kung, whose First American Intermediate Government Bond fund gained 9.6 percent this year.
Treasuries will fall through the middle of next year, a weekly survey of fund managers by Ried, Thunberg & Co. indicates.
The firm’s sentiment index for the end of June was 39 for the seven days ended Dec. 19, versus 40 the week before. A figure below 50 means investors anticipate lower prices.
Ried Thunberg, based in Jersey City, New Jersey, surveyed 27 fund managers controlling $1.37 trillion. The company is a unit of ICAP Plc, the world’s largest broker of trades between banks.
