Oggi asta di 14miliardi di dollaruzzi in 5y t-note, i risultati alle 19 as usual, gli altri dati di jurnata alle 16 e alle 16,30 scorte energetiche
U.S. Treasury Notes Decline on View Fed to Keep Rate Stance
June 8 (Bloomberg) -- U.S. Treasuries declined on expectations the Federal Reserve will keep raising interest rates, and before the government's $14 billion auction of five- year notes.
Atlanta Fed Bank President Jack Guynn said yesterday inflation is accelerating, adding to the case for higher rates. Interest-rate futures signal traders expect the Fed will lift its target twice more this year. Fed Chairman Alan Greenspan will testify to a Congressional committee tomorrow on the economy.
Treasuries ``are getting pretty unattractive,'' said Marc Seidner, director of a group that oversees $21 billion at Standish Mellon Asset Management in Boston. ``The additional yield one earns doesn't seem to compensate the investor'' for current levels of inflation, he said.
The 3 1/2 percent note due in May 2007 fell 1/16, or 31 U.S. cents per $1,000 face amount, to 99 27/32 as of 8:35 a.m. in New York, according to bond broker Cantor Fitzgerald LP. The yield rose 2 basis points, or 0.02 percentage point, to 3.58 percent and is 58 basis points, above the Fed's target rate for overnight loans between banks of 3 percent, about the narrowest since March 2004.
The 10-year note declined 1/8 of a point, pushing its yield up 2 basis points to 3.92 percent. The yield is down from the high this year of 4.69 percent in March.
``Greenspan isn't going to be saying the Fed is going to be pausing anytime soon, so the market is at risk with yields where they are,'' said Cyril Beuzit, head of interest rate strategy at BNP Paribas SA in London. ``The Fed will keep delivering rate hikes, which means there's no value in two-year notes.''
Inflation, Auctions
U.S. consumer prices rose 3.5 percent in the year to April, a government report showed on May 18, the most since November. Excluding food and energy costs, core prices rose 2.2 percent, compared with a 2.3 percent increase the previous month.
``The direction of each'' gauge of inflation in the U.S. ``is certainly up,'' Guynn said yesterday after a speech to financial analysts in Atlanta. He doesn't currently vote on interest rates.
Benchmark five-year notes yielded 3.68 percent before a $14 billion auction of notes of that maturity by the Treasury today. In pre-auction trading, the new note yielded 3.67 percent. Bids are due by 1 p.m.
The amount being sold is down from $15 billion in the last 12 five-year auctions, and the least since 2001.
``The size reduction is obviously a positive,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut, and one of the 22 primary dealers of U.S. government securities that are obligated to bid at the auctions. ``Still, the absolute level of rates and the fact that we have Greenspan tomorrow are probably negatives.''
Falling Yields
Five-year yields have dropped from 3.89 percent when the government last sold five-year notes on May 11. The yield fell as low as 3.59 percent on June 1, the lowest since Feb. 11. The yield is likely to be the lowest for the sale of five years notes since the February 9 auction.
At that auction, there were $2.53 of bids for every $1 sold, compared with $2.37 at the prior auction in January. Debt strategists at Credit Suisse First Boston said in a research report today that foreign participation may rise after a rally in the dollar this year.
Yields on September Eurodollar futures contracts were at 3.69 percent, indicating most traders expect the Fed will lift its target rate to 3.5 percent from the current 3 percent rate. The futures settle at a three-month lending rate that has averaged 21 basis points more than the Fed's target over the past 10 years.
Yield Gap
The difference in yield, or spread, between two- and 10-year notes is 34 basis points, matching the narrowest since 2001. The CFSB strategists said they expect the gap to narrow to 25 basis points.
The government will sell $8 billion of 10-year notes tomorrow, in a reopening of an earlier issue. Ten-year yields today held below 4 percent for the seventh straight day, the longest such stretch since March 2004.
Greenspan yesterday helped send yields lower by suggesting they may not rise soon following an ``unusual'' decline to a 14- month low. The Fed Chairman is scheduled to speak about the economy to the Joint Economic Committee tomorrow.
``The Treasury market, as we've seen, has received what Greenspan said very positively so therefore I wouldn't expect him to increase bond yields by saying anything extraordinary tomorrow,'' said Geoff Lunt, who helps manage about $7 billion of fixed-income at HSBC Halbis Partners Ltd. in London.
`Without Recent Precedent'
Greenspan told a conference in Beijing via satellite yesterday that the slide in yields to a 14-month low was ``unusual'' and ``without recent precedent.'' He said the decline, amid a 2 percentage point gain in interest rates, cannot be fully explained.
Purchases of U.S. debt by global investors are partly responsible for lower yields, Greenspan said. Asked if there would be any change soon, he said: ``I would think not.''
The Fed has raised rates in quarter-point increments eight times since June, most recently on May 3. Central bank policy makers next meet on June 29-30. The Fed last month judged that faster inflation was a bigger threat to the economy than a series of weak economic reports, according to minutes of the policy meeting released on May 24.
A technical chart that traders use to predict price changes is suggesting the rally in 10-year notes may end. The note's 10- day relative strength index, a gauge of momentum, was 70. A level of 70 or above suggests the note's price may be poised to drop.
