Treasuries rose for a fourth week, pushing 30-year bond yields to the lowest level since December, as a plunge in commodities reduced concern inflation will climb and investors sought a refuge from Greece’s debt crisis.
U.S. two-year note yields dropped yesterday to the lowest level since March after reports European finance officials were in Luxembourg for an unscheduled meeting that may address restructuring Greek debt. Treasury yields had risen earlier yesterday after a government report showed payrolls accelerated in April in the biggest gain since May 2010. A report next week may show retail sales rose for a 10th straight month.
“It’s too soon to say it’s a turn for the job market, given the fact that other data have gotten worse,” said George Goncalves, head of interest rate strategy at Nomura Holdings Inc one of 20 primary dealers that trade directly with the Federal Reserve. “The issues surrounding the sovereign debt market are still systemic in nature and could get worse. Any smell of uncertainty is enough to drive people into Treasuries, regardless of price or yield.”
The yield on the 30-year bond fell 11 basis points or 0.11 percentage point to 4.29 percent from 4.40 on April 29. It touched 4.25 percent on May 5, the least since Dec. 7. The 4.75 percent security due in February 2041 rose 1 30/32, or $19.38 per $1,000 face amount, to 107 24/32.
Yield Swings
The yield on the 10-year note dropped 14 basis points to 3.15 percent from 3.29 percent. Two-year note yields dropped five basis points to 0.55 percent from 0.60 percent. Six-month bill rates yesterday touched a record low 0.0305 percent.
European finance officials were in Luxembourg for an unscheduled session yesterday that may address proposals for restructuring Greek debt, said two European officials familiar with the situation.
Greece was the first euro-zone country to seek a bailout a year ago, as concern about its rising debt, led to a surge in bond yields. Greek debt has tumbled since the 110 billion-euro bailout ($158 billion) in 2010, with yields on two-year debt reaching a euro-era record of 26.27 percent on April 28.
“One concern is what would happen to euro banks that own the debt, and is it going to be marked down further, creating more of an economic issue,” said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA Inc.
Jobs Report
Treasuries fell earlier yesterday after the Labor Department said the U.S. added 244,000 jobs, more than the 185,000 forecast in a Bloomberg News survey. Employment excluding government jobs jumped the most in five years.
The jobless rate rose to 9 percent from 8.8 percent in March, the first increase since November.
The payrolls data highlighted a week of mixed economic news that fueled Treasuries notes on a seven-day rally.
The Institute for Supply Management’s manufacturing index fell to 60.4 in April from 61.2 a month earlier, the Tempe, Arizona-based group said May 2. The median forecast of 78 economists surveyed by Bloomberg News was 59.5. Estimates ranged from 57.5 to 62.
The ISM’s index of non-manufacturing companies slumped to 52.8 in April, the lowest since August, from 57.3 a month Earlier, a report said May 4. The median forecast of 73 economists surveyed by Bloomberg News was 57.5.
Sales Gain
A report May 12 is forecast to show retail sales rose by 0.6 percent in April, up from 0.4 percent the previous month, according to the estimates of 62 economists in a Bloomberg News survey.
“The data seems to be a little bit mixed,” said Ray Remy, head of fixed-income in New York at Daiwa Capital Markets America Inc. “People are concerned that we may be slowing down a bit.”
Commodities plunged May 5 the most since 2009, led by oil and silver, and stocks had posted the biggest three-day drop since March. Oil tumbled 15 percent since the May 1 killing of Osama bin Laden, including a drop of 6.6 percent on May 5.
The Treasury will auction $72 billion in notes and bonds next week. The U.S. will sell $32 billion in three-year notes, $24 billion in 10-year debt and $16 billion in 30-year bonds on three consecutive days beginning May 10, equaling the average forecast in a Bloomberg News survey of 19 of 20 primary dealers on May 2.
Treasuries have returned 1.7 percent since the start of 2011, compared with a 5.9 percent return last year, according to Bank of America Merrill Lynch indexes.
“The bond market reacted positively to the disappointing economic news,” said Gary Pollack, head of fixed-income trading at a Deutsche Bank AG Private Wealth Management group in New York that oversees $12 billion. “Investors are buying bonds, even at these low levels, as they anticipate weaker growth.”
The Fed has held its target rate for overnight lending between banks at zero to 0.25 percent since December 2008. Policy makers affirmed at their April 27 meeting the plan to buy Treasuries through June in an effort to foster faster economic growth and jobs expansion.
Source: http://www.bloomberg.com
U.S. two-year note yields dropped yesterday to the lowest level since March after reports European finance officials were in Luxembourg for an unscheduled meeting that may address restructuring Greek debt. Treasury yields had risen earlier yesterday after a government report showed payrolls accelerated in April in the biggest gain since May 2010. A report next week may show retail sales rose for a 10th straight month.
“It’s too soon to say it’s a turn for the job market, given the fact that other data have gotten worse,” said George Goncalves, head of interest rate strategy at Nomura Holdings Inc one of 20 primary dealers that trade directly with the Federal Reserve. “The issues surrounding the sovereign debt market are still systemic in nature and could get worse. Any smell of uncertainty is enough to drive people into Treasuries, regardless of price or yield.”
The yield on the 30-year bond fell 11 basis points or 0.11 percentage point to 4.29 percent from 4.40 on April 29. It touched 4.25 percent on May 5, the least since Dec. 7. The 4.75 percent security due in February 2041 rose 1 30/32, or $19.38 per $1,000 face amount, to 107 24/32.
Yield Swings
The yield on the 10-year note dropped 14 basis points to 3.15 percent from 3.29 percent. Two-year note yields dropped five basis points to 0.55 percent from 0.60 percent. Six-month bill rates yesterday touched a record low 0.0305 percent.
European finance officials were in Luxembourg for an unscheduled session yesterday that may address proposals for restructuring Greek debt, said two European officials familiar with the situation.
Greece was the first euro-zone country to seek a bailout a year ago, as concern about its rising debt, led to a surge in bond yields. Greek debt has tumbled since the 110 billion-euro bailout ($158 billion) in 2010, with yields on two-year debt reaching a euro-era record of 26.27 percent on April 28.
“One concern is what would happen to euro banks that own the debt, and is it going to be marked down further, creating more of an economic issue,” said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA Inc.
Jobs Report
Treasuries fell earlier yesterday after the Labor Department said the U.S. added 244,000 jobs, more than the 185,000 forecast in a Bloomberg News survey. Employment excluding government jobs jumped the most in five years.
The jobless rate rose to 9 percent from 8.8 percent in March, the first increase since November.
The payrolls data highlighted a week of mixed economic news that fueled Treasuries notes on a seven-day rally.
The Institute for Supply Management’s manufacturing index fell to 60.4 in April from 61.2 a month earlier, the Tempe, Arizona-based group said May 2. The median forecast of 78 economists surveyed by Bloomberg News was 59.5. Estimates ranged from 57.5 to 62.
The ISM’s index of non-manufacturing companies slumped to 52.8 in April, the lowest since August, from 57.3 a month Earlier, a report said May 4. The median forecast of 73 economists surveyed by Bloomberg News was 57.5.
Sales Gain
A report May 12 is forecast to show retail sales rose by 0.6 percent in April, up from 0.4 percent the previous month, according to the estimates of 62 economists in a Bloomberg News survey.
“The data seems to be a little bit mixed,” said Ray Remy, head of fixed-income in New York at Daiwa Capital Markets America Inc. “People are concerned that we may be slowing down a bit.”
Commodities plunged May 5 the most since 2009, led by oil and silver, and stocks had posted the biggest three-day drop since March. Oil tumbled 15 percent since the May 1 killing of Osama bin Laden, including a drop of 6.6 percent on May 5.
The Treasury will auction $72 billion in notes and bonds next week. The U.S. will sell $32 billion in three-year notes, $24 billion in 10-year debt and $16 billion in 30-year bonds on three consecutive days beginning May 10, equaling the average forecast in a Bloomberg News survey of 19 of 20 primary dealers on May 2.
Treasuries have returned 1.7 percent since the start of 2011, compared with a 5.9 percent return last year, according to Bank of America Merrill Lynch indexes.
“The bond market reacted positively to the disappointing economic news,” said Gary Pollack, head of fixed-income trading at a Deutsche Bank AG Private Wealth Management group in New York that oversees $12 billion. “Investors are buying bonds, even at these low levels, as they anticipate weaker growth.”
The Fed has held its target rate for overnight lending between banks at zero to 0.25 percent since December 2008. Policy makers affirmed at their April 27 meeting the plan to buy Treasuries through June in an effort to foster faster economic growth and jobs expansion.
Source: http://www.bloomberg.com
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