Treasuries Decline Less Than Global Stocks Amid Fed Speculation Treasuries fell less than stocks around the world over the past month even as both tumbled on speculation the Federal Reserve is preparing to reduce bond purchases used to support the economy. U.S. government securities dropped 1.8 percent in June, the Bloomberg U.S. Treasury Bond Index (BUSY) shows. The MSCI All-Country World Index of developed and emerging shares fell 2.9 percent including reinvested dividends, based on data compiled by Bloomberg. Federal Reserve Chairman Ben S. Bernanke said June 19 policy makers may begin slowing their bond purchases this year and end them in mid-2014. “There’s reduced appetite for risk,” said Peter Jolly, Sydney-based head of market research for National Australia Bank Ltd., the nation’s largest lender by assets. “The economy and companies will not do well with higher yields and the Federal Reserve pulling back on the easing.” U.S. 10-year yields increased two basis points to 2.51 percent as of 11:49 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 1.75 percent note due in May 2023 fell 5/32, or $1.56 per $1,000 face amount, to 93 13/32. Japan’s 10-year yield increased 3 1/2 basis points to 0.89 percent. The nation’s government bonds fell 0.1 percent in June, according to the Bloomberg Japan Sovereign Bond Index. (BJPN) Treasury Secretary Jacob J. Lew said that while the U.S. economy probably won’t grow as fast as in the 1990s, he’s confident gross domestic product can accelerate more than it is now. Lew spoke yesterday at a conference in Aspen, Colorado. “The U.S. economy continues to recover,” said Hiroki Shimazu, an economist in Tokyo at SMBC Nikko Securities Inc., which is part of Japan’s second-largest publicly traded bank. “Ten-year yields will be around 3 percent” by year-end, he said. Shimazu revised his forecast after the yield reached his earlier target of 2.5 percent. U.S. payrolls probably grew by 165,000, after rising 175,000 in May, according to the median forecast of economists in a Bloomberg News survey ahead of July 5 figures from the Labor Department. An industry report today will show U.S. manufacturing expanded in June, based on responses from economists. The Fed is buying $85 billion of Treasuries and mortgage-backed securities each month to support the economy by putting downward pressure on borrowing costs. China is ready for the possible end of quantitative easing by the U.S. and has prepared plans on fund outflows, Oriental Morning Post reported, citing Guan Tao, an official of the State Administration of Foreign Exchange.
Posted on: Mon, 01 Jul 2013 03:09:35 +0000
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