Reuters
US Treasuries comforted by soft inflation data
Monday August 30, 9:12 am ET
By Wayne Cole
NEW YORK, Aug 30 (Reuters) - Treasury debt prices nudged higher on Monday, helped by a benign reading on U.S. inflation, though trading was sparse at best ahead of more important economic news later in the week.
The benchmark 10-year note (US10YT=RR) added 3/32 in price, lowering yields to 4.22 percent from 4.23 percent late on Friday. Yields have been confined to a 4.15 percent to 4.31 percent range for three weeks now and are only likely to break out when the August payrolls report is released on Friday.
Monday's figures showed real consumption bounced back 0.8 percent in July as consumers snapped up discounted autos. However, incomes rose just 0.1 percent while the savings rate fell to a mere 0.6 percent, suggesting consumers will find it increasingly hard to fund their spending habits.
There was favorable news for fixed-income investors as the core personal consumption expenditures price index was unchanged on the month, leaving the annual rate at 1.5 percent.
This is the Federal Reserve's preferred measure of inflation and the July result leaves it comfortably within the central bank's presumed 1.0 percent to 2.0 percent comfort zone.
Still, there was nothing in the data to shake the market's conviction that the Fed will hike rates again at its next meeting on Sept. 21. Only the payrolls report can do that.
Recent job reports have stunned with their weakness, causing huge falls in yields. Yet Fed officials have remained doggedly upbeat on the economy and signaled an intention to keep raising rates.
Interest rate futures (0#FF
have priced in over an 80 percent chance of a quarter point hike next month and only another dismal jobs report could change that.
"If a 200,000-plus jobs number comes through, the Fed is most likely going to raise rates 25 basis points. They may even do so with a 150,000 figure, which is still evolving as the consensus," said Chris Rupkey, senior financial economist at Bank of Tokyo Mitsubishi.
He is one of the few economists who thinks the Fed will not raise rates next month. "But the payroll jobs report has the power to turn around the outlook 180 degrees," he added.
Given the importance of the jobs figures, trading activity is likely to be very tentative in the run up to Friday. Early on Monday, the two-year note (US2YT=RR) was up a slight 1/32, leaving yields at 2.49 percent from 2.50 percent at the end of last week.
The five-year note (US5YT=RR) added 2/32, taking yields to 3.42 percent from 3.43 percent. The 30-year bond (US30YT=RR) firmed 4.32, lowering yields to 5.01 percent from 5.02 percent.
Richard Gilhooly, fixed-income market strategist at BNP Paribas, identified two supporting factors for bonds, albeit short-lived ones. One was the fear of terrorist action around the Republican convention, which was weighing on the psychology of would-be bears. The other was expected buying from index funds as month-end portfolio indices extend.
"We expect sellers to resurface once these risks have diminished," he added.
BNP looks for payrolls to rise 175,000 in August and, as a result, assumes the Fed will indeed hike on Sept. 21.
... per certo so dove lo sto prendendo io.....stamattina aperturina in gap con le aste e se lo sono subito richiuso........se venerdi escono dati pro bond devo ipotecare la macchina 
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non c'è un filtro per non sciropparsi lo zucchero spinto di tale dan24? c'ho già il diabete a 3000 a leggerlo 
