bund & c.: la partenza a razzo. Seduti? Pronti? Viaaaaaa

[gastronomo]

Stavo per andare lungo, meno male ho tolto l'ordine, un altro martini please

Treasuries retreat as mortgage sector turns jittery
Wed Oct 26, 2005 02:06 PM ET
(Adds auction details, analyst comments, updates prices)
By Pedro Nicolaci da Costa

NEW YORK, Oct 26 (Reuters) - U.S. Treasury debt prices retreated for a third straight session on Wednesday as mortgage-related selling helped push benchmark yields to their highest level in seven months.

The selling took on a momentum of its own after rapidly raising yields breached 4.53 percent, a key chart level that forced investors worried about slower prepayment speeds of mortgage loans to dump Treasuries.

Benchmark 10-year notes (US10YT=RR: Quote, Profile, Research) were 5/32 lower for a yield of 4.57 percent, up from 4.54 percent on Tuesday but below the 4.61 percent touched at the height of selling.

"It is looking increasingly likely that the 10-year's trading range is re-setting from the placid 4.00-4.50 percent range that has prevailed for 2-1/2 years to something higher," said Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co.

Bonds got little help from an auction of $20 billion in two-year notes that dealers described as average. The sale garnered a high yield of 4.365 percent and 2.21 times the number of bids per dollar of debt on offer.

That was just above the 2.17 percent average of the nine previous two-year auctions in 2005.

Indirect bidders, which include customers of primary dealers and foreign central banks, took home $6.93 billion or 34.7 percent of the deal, also just above the 34.1 percent average at the nine previous two-year auctions.

The current two-year note (US2YT=RR: Quote, Profile, Research) was off 1/32 and yielding 4.37 percent, up from 4.34 percent.

Treasuries resumed a two-month selling trend this week as it dawned on investors that not only is the Federal Reserve likely to raise interest rates when it meets next week, it is also bound to keep doing so in the foreseeable future.

The nomination of Ben Bernanke to succeed Greenspan next month removed some uncertainty from the market, but impatient traders started to question his inflation-fighting credentials before he was even confirmed for the job.

"Some of this selling is related to uncertainty over the inflation view of the proposed new Fed chairman," said Andrew Brenner, head of fixed-income at Investec U.S.

Traders reported heavy trading volume, a good deal related to a mortgage-market looking to hedge against slower prepayments that would prevent brokers from reinvesting at higher yields -- a phenomenon known as extension risk.

But poor performance in European debt was also spilling over into U.S. markets, felled both by positive economic news in Germany and tough talk on inflation from the European Central Bank.

Adding to bond-negative sentiment, the Financial Times reported that AHBR, one of Germany's top mortgage lenders, was "close to failure." U.S. dealers feared such an event would likely trigger heavy selling of U.S. government securities from AHBR's porfolio.

Five-year notes (US5YT=RR: Quote, Profile, Research) eased 4/32 for a yield of 4.45 percent, while the 30-year bond (US30YT=RR: Quote, Profile, Research) lost 13/32 to yield 4.77 percent, up from 4.74 percent.

 

[Fleursdumal]

vuoi andare lungo? aspetta la s3
mortgage related selling e negative convexity, miele per le mie orecchie

per me uno sprizzetto plis

 

[gastronomo]

vuoi andare lungo? aspetta la s3
mortgage related selling e negative convexity, miele per le mie orecchie

per me uno sprizzetto plis

ho come il sospetto che abbia ragione tu... torno alla mia grappetta che faccio meno danni...

 

[Fleursdumal]

s3 mi rendo conto ora nu poco troppo esaggerato

la regola del megagap secondo il vangelo apocrifo del T-bronx domani chiamerebbe un altro gapdown

domani oltre al solito delirio di dati parla anche il nonnetto..

 

[Fleursdumal]

vuoi andare lungo? aspetta la s3
mortgage related selling e negative convexity, miele per le mie orecchie

per me uno sprizzetto plis

ho come il sospetto che abbia ragione tu... torno alla mia grappetta che faccio meno danni...

ha segnato Montella

 

[Fleursdumal]

raddoppio di Totti non mi dire che si son svegliati oggi

 

[gastronomo]

Non voglio sentire nulla che sono interista...

Treasuries Fall, Pushing 10-Year Yields to Highest Since March
Oct. 26 (Bloomberg) -- U.S. Treasuries fell, pushing the 10-year note's yield to the highest since its peak this year in March, on speculation the Federal Reserve will continue raising interest rates into next year.

European and Japanese government bonds also slumped on speculation central banks in those regions will lift rates for the first time in years. Two-year Treasury yields, more sensitive to expectations for monetary policy, are at a four- year high. Inflation has accelerated, led by fuel prices.

``The economy has shown sufficient resilience that the perception has changed from `The Fed should stop sometime soon' to `We're not sure when the Fed is going to stop,''' said Kevin Barry, who oversees $6 billion as head of U.S. core fixed-income investments at Credit Suisse Asset Management in New York.

The benchmark 10-year note's yield rose 4 basis points, or 0.04 percentage point, to 4.58 percent at 2:03 p.m. in New York, according to Cantor Fitzgerald LP. Yields move inversely to prices. Earlier it touched 4.60 percent, the highest since March 30, and the three-day rise is the biggest since March. The yield's peak for the year was 4.69 percent on March 23.

The price of the 4 1/4 percent note maturing in August 2015 fell almost 3/8, or $3.75 per $1,000 face amount, to 97 13/32. The yield is up 19 basis points in since Oct. 21. It may reach 5 percent by year-end and 5.25 percent by mid-2006, Barry said.

Treasuries extended a selloff that began when Ben Bernanke was named to succeed Alan Greenspan as Fed chairman two days ago.

`Caught Flatfooted'

``It's the biggest breakdown we've seen in the market in a long time and it's caught people flatfooted,'' said Gregg Cohen, a proprietary trader at Cantor Fitzgerald. ``It started with Bernanke.''

The two-year note's yield rose as much as 4 basis points to 4.38 percent, the highest since May 2001. The Treasury Department sold $20 billion of two-year securities in an auction today at a yield of 4.365 percent.

``We've got the prospect we could have the G-3 central banks have correlated tightenings at the end of the first quarter next year,'' said Jason Evans, head of U.S. Treasury trading at Deutsche Bank Securities Inc. in New York, referring to the Fed, the European Central Bank and the Bank of Japan.

Though a 4.65 percent 10-year yield may attract buyers, ``I see no reason to rush in and catch a falling sword,'' Evans said. Deutsche Bank is one of the 22 primary U.S. government securities dealers that trade with the Fed's New York branch.

European 10-year government bonds headed for their biggest two-day drop since 2003 on speculation the ECB will raise interest rates as soon as this quarter, for the first time since 2000. The Japanese 10-year yield rose to within 2 basis points of a one-year high.

Futures Yields

Interest rate futures show traders are increasingly convinced the Fed, which has raised its target for the overnight lending rate between banks 11 times since June 2004, will raise it at each of the three remaining meetings of Greenspan's tenure.

The federal funds rate target stands at 3.75 percent. Fed funds futures are fully pricing in increases to 4 percent on Nov. 1 and to 4.25 percent on Dec. 13. The odds of a Jan. 31 increase to 4.5 percent rose to 76 percent from 64 percent yesterday.

The rise in yields also reflects the risk that the Fed may not control inflation as effectively after Greenspan's term as chairman ends Jan. 31, interest-rate strategists at Barclays Capital Inc. in New York, wrote in a research report. Bernanke, a former Fed governor, will succeed Greenspan pending confirmation by the U.S. Senate.

Inflation Stand

Bernanke is ``going to have to prove to the market he's tough on inflation,'' said Raymond Remy, head of fixed income at primary dealer Daiwa Securities America Inc. in New York. Bond investors demand higher yields to compensate for the risk inflation will erode the value of their interest payments and principal.

Ten-year yields have risen more than shorter-maturity yields, indicating increased expectations for inflation. The margin by which the 10-year yield exceeds the two-year yield stands at 21 basis points, up from 18 basis points on Oct. 24.

The gap remains small by historical standards. It stood at 187 basis points the day before the Fed began raising rates, and shrank to 12 basis points, the smallest in four years, in August.

The yield at the government two-year auction today was close to the 4.363 percent estimate among six bond trading firms polled before the auction. The new notes mature in October 2007.

U.S. Growth Rate

Economists forecast the U.S. expansion will continue into a fifth year in 2006. Gross domestic product will grow 3.3 percent next year, according to the median forecast of 68 economists polled by Bloomberg.

The Commerce Department is expected to say growth accelerated to an annual 3.6 percent rate in the three months through September 30 from 3.3 percent in the second quarter, according to the median forecast of 66 economists in a Bloomberg survey.

The implicit price deflator, a measure of inflation tied to the GDP report, probably rose at a 2.8 percent annual rate following the second quarter's 2.6 percent gain, according to the median estimate of 41 economists surveyed by Bloomberg.

A surge in fuel prices to records after Hurricane Katrina struck the U.S. Gulf Coast in August pushed consumer prices up by the most in 25 years in September, an Oct. 14 Labor Department report showed. Prices rose 4.7 percent from a year earlier, the biggest increase since 1991.

Role of Mortgages

A ``substantial'' amount of selling of mortgage bonds by investors who need to reduce durations of their portfolios exacerbated the rise in yields, said Richard Lightburn, head of agency mortgage bond trading at HSBC USA Inc.

Mortgage bond returns lag Treasuries when rates rise as projections of slower refinancing by homeowners increase duration, or price sensitivity to rate changes. The Mortgage Bankers Association said refinancings declined 8.5 percent last week and accounted for a smaller share of total applications for mortgage loans than a year ago.

Yields at the highest in almost seven months may attract buyers, said James Bianco, president of bond research firm Bianco Research LLC in Chicago.

``Throughout 2004 and 2003 we haven't been able to sustain those levels,'' Bianco said. ``We're at the higher end of the range right now and we're probably going to peak here and move toward 4.25 percent'' for the 10-year note.



To contact the reporter on this story:
Elizabeth Stanton in New York at estanton@bloomberg.net

 

[gastronomo]

'Giorno

New Zealand Raises Key Rate a Qtr-Point to Record 7% (Update5)
Oct. 27 (Bloomberg) -- New Zealand's central bank raised its benchmark interest rate a quarter point to a record 7 percent and said it may increase borrowing costs again after consumer spending fanned inflation to a five-year high.

``The prospect of a further tightening may only be ruled out once a noticeable moderation in housing and consumer spending is observed,'' Reserve Bank of New Zealand Governor Alan Bollard said in a statement released in Wellington today. ``We see no prospect of an easing in the foreseeable future.''

Bollard, who is tasked by the government with keeping inflation between 1 percent and 3 percent, has raised rates eight times since January 2004 to the highest of any nation with the top credit rating at Moody's Investors Service. He said he may raise rates again because consumer borrowing and demand in the $97 billion economy is rising too quickly.

``We have seen ongoing momentum in domestic demand and persistently tight capacity constraints,'' Bollard said. ``We remain concerned that inflation pressures are not abating sufficiently to achieve our medium-term target.''

Bollard, 54, last raised rates in March. Three of 13 economists surveyed by Bloomberg News today expect he will raise the benchmark rate to 7.25 percent at his next review on Dec. 8. Ten expect no change.

Consumer prices rose 3.4 percent in the year ended Sept. 30, the fastest pace since December 2000. In September, Bollard forecast annual inflation would rise to 3.9 percent by March 31 before declining to 3 percent by December.

Central Banks

New Zealand's benchmark is 3.25 percentage points more than the Federal Reserve's target. Fed policy makers have raised rates six times this year. The Reserve Bank of Australia last raised interest rates in March. Central banks in South Korea, Thailand, Indonesia, Taiwan and the Philippines have increased rates this year to curb inflation as fuel prices surge.

The yield on a three-month bank-bill futures contract maturing in December was unchanged at 7.39 percent at the close in Wellington, suggesting traders expect another increase this year. Investors and economists are less convinced.

``There are tentative signs things are slowing,'' said Peter Scobie, who helps manage the equivalent of $2.2 billion of fixed interest and cash at AMP Capital Investors New Zealand Ltd. in Wellington. ``It's not a foregone conclusion.''

House Prices

Bollard said borrowing against the increased value of homes was underpinning consumer spending. House prices rose 15 percent in September from a year earlier.

``The most serious risk to inflation is the continuing strength in household spending, supported by a relentless housing market and rapid growth in mortgage lending,'' he said. ``Borrowers and lenders alike need to recognize that the current rate of debt accumulation is unsustainable.''

Increased borrowing and consumer demand for imports has seen the nation's current account deficit, the broadest measure of trade, widen to a record in the year to June.

``The correction of these imbalances and associated inflation pressures will require a slowdown in housing, credit growth and domestic spending,'' Bollard said. ``We also expect a significantly lower exchange rate.''

The longer these adjustments take, ``the more disruptive they are likely to be,'' he said.

Rising Currency

Rising interest rates helped the New Zealand dollar gain 3.1 percent the past month, the best performer of 16 major currencies tracked by Bloomberg. Individual Japanese investors prefer New Zealand bonds to Australian bonds, said Sydney-based Koji Ito, managing director of Nomura Australia Ltd., a unit of Nomura Securities Co. Australian's benchmark interest rate is 5.5 percent.

The New Zealand currency bought 70.56 U.S. cents at 5:15 p.m. in Wellington from 70.21 cents before the statement was released. The currency reached a five-month high against the Australian dollar this month.

Bollard said economic growth is slowing, particularly amongst exporters.

Business confidence fell to a four-month low this month, according to a survey of 551 companies by National Bank of New Zealand. That's equivalent to annual economic growth of 1 percent in the year ahead, according to John McDermott, chief economist at National Bank in Wellington.

``We expect the housing market will trudge on,'' McDermott said today. ``For consumer spending, the official numbers will be strong, but by December Bollard will have the anecdotes about how pre- Christmas trading is looking. If it looks like a shocker, he won't move.''

Slowing Growth

The economy expanded 3.1 percent in the year ended June 30, according to government figures last month. Growth will slow to 2.4 percent in 2005 and 2 percent in 2006, Bollard forecast on Sept. 15.

``Our sales are looking pretty flat,'' said Rick Fala, chief executive of Methven Ltd., an Auckland-based supplier of bathroom fittings. ``Higher interest rates means existing home owners are frightened off buying new homes.''

Still, many home owners are opting to renovate, which is a more affordable option, Fala said in an interview yesterday.

``I don't expect a hard landing,'' he said. ``Someone renovating their own home is prepared to pay for quality.''

Approvals to build or renovate homes fell 20 percent in the eight months ended Aug. 31 from a year earlier, according to government figures.

Methven's Fala said he raised prices on Oct. 1 to pass on the increased cost of raw materials, in particular the brass used in taps and other fittings.

Express Couriers Ltd., New Zealand's biggest courier business, will add a 1.8 percent surcharge to its prices from Nov. 1 to help make up for rising fuel costs, Chief Executive Jim Quinn said in a letter to customers last week.



To contact the reporter on this story:
Tracy Withers in Wellington at twithers@bloomberg.net.

 

[gastronomo]

Ueeeè, pigrones, quanto avete tracannato ieri sera che qui son più solo di una particella di sodio

Treasuries up, durables data weaker than expected
Thu Oct 27, 2005 08:49 AM ET
NEW YORK, Oct 27 (Reuters) - U.S. Treasury debt prices held early gains on Thursday after September durable goods data came in weaker-than-expected, though the bond-friendly report was tempered by upward revisions to August data.
The benchmark 10-year note (US10YT=RR: Quote, Profile, Research) , reflecting concerns about an accounting investigation of General Motors, traded 4/32 higher to yield 4.57 percent, compared with 4.59 percent on Wednesday.

Durable goods orders fell 2.1 percent in September, more than the 1.1 percent decline economists expected. But the government revised the August reading upward to positive 3.8 percent from 3.4 percent previously.

Non-defense capital goods orders excluding aircraft, a reliable measure of business investment, fell 1.2 percent in September, though the August reading was also revised upward to positive 4.0 percent from 3.1 percent previously.

Two-year notes (US2YT=RR: Quote, Profile, Research) added 1/32 to yield 4.36 percent versus 4.38 percent on Wednesday.


© Reuters 2005. All Rights Reserved.

NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq and all other quotes delayed by at least 15 minutes. Reuters does not endorse the views or opinions given by any third party content provider.

 

[gastronomo]

Mmmmh, mi sa che oggi non si va da nessuna parte, un sottil denaro per ora ma ci mette comunque di più a salire che a scendere, il nostro incazzosissimo tbronx