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Treasuries Advance as Economic Growth Slowed in First Quarter
By Deborah Finestone and Elizabeth Stanton
April 27 (Bloomberg) -- U.S. Treasuries maturing in two years rose after a government report showed the world's largest economy expanded at the slowest pace in four years during the first quarter.
Gross domestic product grew at a 1.3 percent annual rate, the Commerce Department in Washington said. Gains were limited as an inflation measure watched by the Federal Reserve accelerated.
``It clearly tells you the economy is slowing down and the Fed's going to have to do something about it,'' said Andrew Brenner, co-head of structured products and emerging markets at Man Securities Inc. in New York.
The yield on the two-year note fell 2 basis points, or 0.02 percentage point, to 4.65 percent at 11:53 a.m. in New York, according to bond broker Cantor Fitzgerald LP. The price of the 4 1/2 percent securities maturing in April 2009 rose 1/32, or 31 cents per $1,000 face amount, to 99 23/32. Bond prices move inversely to yields.
Two-year note yields are 4 basis points below 10-year securities, the most since April 5. The yield curve, which charts the gap between the two maturities, tends to steepen, with 10- year yields higher, to account for risks of future inflation eroding returns over time.
`Slowdown in Growth'
``The Fed will acknowledge the slowdown in growth, but inflation won't come down as quickly as we'd like it to,'' said Andrew Harding, who helps manage $16 billion as chief investment officer for fixed income at Allegiant Asset Management in Cleveland. ``The yield curve is going to steepen from here.''
The increase in gross domestic product, the sum of all goods and services produced in the U.S., compares with a 2.5 percent annualized rate in the fourth quarter.
The median forecast of 83 economists surveyed by Bloomberg News was for a 1.8 percent gain.
The Fed's preferred inflation measure, which is tied to consumer spending and strips out food and energy costs, rose at a 2.2 percent annual rate, up from a 1.8 percent fourth-quarter gain. Fed Chairman Ben S. Bernanke is among policy makers who have said a 1 percent to 2 percent increase is preferable.
``We have what everybody's been fearing: a weaker economy with inflation picking up,'' said Theodore Ake, head of U.S. Treasury trading in New York at Mizuho Securities USA Inc., one of the 21 primary dealers that trade with the Fed.
Today's GDP data is based on an advanced report. The first- quarter preliminary result will be released on May 31 with the final report issued on June 28.
The employment-cost index, which measures wages and benefits paid to American workers, rose 0.8 percent in the first quarter, following a revised 0.9 percent gain in the prior period, the Labor Department said. Benefit costs rose 0.1 percent, while wages and salaries increased 1.1 percent, the most in six years.
Interest Rates
Traders see a 25 percent chance the Fed will reduce its target for the overnight lending rate between banks by a quarter- percentage point to 5 percent by its Aug. 7 meeting, interest- rate futures contracts show. The odds rose from 20 percent two weeks ago.
The Reuters/University of Michigan's final index of confidence among U.S. consumers declined to 87.1 this month, a seven-month low, from 88.4 in March. The reading compares with a preliminary April figure of 85.3.
The GDP report pushed the dollar to a record low against the euro, cheapening U.S. financial assets for foreign investors. Over time, dollar weakness should bolster the U.S. economy by making products cheaper in other countries, and may stoke inflation by raising the prices of goods imported for U.S. consumers.
U.S. equity markets declined, interrupting a rally that has lifted stocks the most of any month in three years. The Dow Jones Industrial Average rose to a record 13,105.50 yesterday.
``There's a tremendous amount of cross-currents going on in the marketplace,'' said Brian Edmonds, head of interest rates in New York at primary dealer Cantor Fitzgerald LP.
By Deborah Finestone and Elizabeth Stanton
April 27 (Bloomberg) -- U.S. Treasuries maturing in two years rose after a government report showed the world's largest economy expanded at the slowest pace in four years during the first quarter.
Gross domestic product grew at a 1.3 percent annual rate, the Commerce Department in Washington said. Gains were limited as an inflation measure watched by the Federal Reserve accelerated.
``It clearly tells you the economy is slowing down and the Fed's going to have to do something about it,'' said Andrew Brenner, co-head of structured products and emerging markets at Man Securities Inc. in New York.
The yield on the two-year note fell 2 basis points, or 0.02 percentage point, to 4.65 percent at 11:53 a.m. in New York, according to bond broker Cantor Fitzgerald LP. The price of the 4 1/2 percent securities maturing in April 2009 rose 1/32, or 31 cents per $1,000 face amount, to 99 23/32. Bond prices move inversely to yields.
Two-year note yields are 4 basis points below 10-year securities, the most since April 5. The yield curve, which charts the gap between the two maturities, tends to steepen, with 10- year yields higher, to account for risks of future inflation eroding returns over time.
`Slowdown in Growth'
``The Fed will acknowledge the slowdown in growth, but inflation won't come down as quickly as we'd like it to,'' said Andrew Harding, who helps manage $16 billion as chief investment officer for fixed income at Allegiant Asset Management in Cleveland. ``The yield curve is going to steepen from here.''
The increase in gross domestic product, the sum of all goods and services produced in the U.S., compares with a 2.5 percent annualized rate in the fourth quarter.
The median forecast of 83 economists surveyed by Bloomberg News was for a 1.8 percent gain.
The Fed's preferred inflation measure, which is tied to consumer spending and strips out food and energy costs, rose at a 2.2 percent annual rate, up from a 1.8 percent fourth-quarter gain. Fed Chairman Ben S. Bernanke is among policy makers who have said a 1 percent to 2 percent increase is preferable.
``We have what everybody's been fearing: a weaker economy with inflation picking up,'' said Theodore Ake, head of U.S. Treasury trading in New York at Mizuho Securities USA Inc., one of the 21 primary dealers that trade with the Fed.
Today's GDP data is based on an advanced report. The first- quarter preliminary result will be released on May 31 with the final report issued on June 28.
The employment-cost index, which measures wages and benefits paid to American workers, rose 0.8 percent in the first quarter, following a revised 0.9 percent gain in the prior period, the Labor Department said. Benefit costs rose 0.1 percent, while wages and salaries increased 1.1 percent, the most in six years.
Interest Rates
Traders see a 25 percent chance the Fed will reduce its target for the overnight lending rate between banks by a quarter- percentage point to 5 percent by its Aug. 7 meeting, interest- rate futures contracts show. The odds rose from 20 percent two weeks ago.
The Reuters/University of Michigan's final index of confidence among U.S. consumers declined to 87.1 this month, a seven-month low, from 88.4 in March. The reading compares with a preliminary April figure of 85.3.
The GDP report pushed the dollar to a record low against the euro, cheapening U.S. financial assets for foreign investors. Over time, dollar weakness should bolster the U.S. economy by making products cheaper in other countries, and may stoke inflation by raising the prices of goods imported for U.S. consumers.
U.S. equity markets declined, interrupting a rally that has lifted stocks the most of any month in three years. The Dow Jones Industrial Average rose to a record 13,105.50 yesterday.
``There's a tremendous amount of cross-currents going on in the marketplace,'' said Brian Edmonds, head of interest rates in New York at primary dealer Cantor Fitzgerald LP.
Fleursdumal
फूल की बुराई
f4f ha scritto:eqquazzo dai in coro ...
AUGURI DAN !!
AUGURI MASGUI
Fleursdumal
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f4f ha scritto:cominciano ad avere paura ??
dicono che sta avvenendo il peggio, economia giù inflazione sù azzi loro, fosse la volta buona che affondano per conto loro
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