Treasury Annual Loss Approaches Record on Fed Tapering Outlook Treasuries approached their steepest annual loss on record as a pickup in employment boosts speculation the Federal Reserve will curb the bond purchases it uses to support the economy this year. U.S. government debt has fallen 3.5 percent so far this year, Bank of America Merrill Lynch indexes show. The only other time they had a bigger annual loss was 2009, when they dropped 3.7 percent, based on the data, which go back to 1978. The Treasury Department plans to sell $66 billion of notes and bonds this week. Fed Chairman Ben S. Bernanke said last month policy makers may “moderate” their asset-purchase program later this year and may end it mid-2014 if economic growth meets forecasts. “Bernanke’s view is very clear,” said Kei Katayama, who buys non-yen debt in Tokyo for Daiwa SB Investments Ltd., which manages the equivalent of $48.6 billion. “He wants to finish tapering by the middle of next year. The economic figures are relatively strong.” Ten-year yields touched 2.75 percent, the highest for a benchmark since August 2011, before trading at 2.73 percent at 10:18 a.m. in Tokyo, Bloomberg Bond Trader data show. The price of the 1.75 percent debt due in May 2023 was 91 18/32. Benchmark 10-year yields climbed on July 5 after a Labor Department report showed the economy added 195,000 jobs in June, compared with the median forecast of 165,000 in a Bloomberg News survey of 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. The U.S. will sell $32 billion of 3-year notes tomorrow, $21 billion of 10-year debt the next day and $13 billion of 30-year bonds July 11.
Posted on: Mon, 08 Jul 2013 01:54:32 +0000