Treasury Yields Advance to 2-Year High Relative to S&P Dividend Treasury yields rose to a two-year high relative to dividends of companies in the Standard & Poor’s 500 Index on speculation a strengthening economy will lead the Federal Reserve to trim its bond-buying program. Treasuries fell for a third day, the longest losing streak since June, before the Fed issues minutes on Aug. 21 of last month’s meeting. The spread between benchmark 10-year Treasuries and the S&P 500 dividend yield widened to 73 basis points, the most since August 2011. Chairman Ben S. Bernanke and his fellow policy makers on the Federal Open Market Committee are scheduled to meet on Sept. 17-18. “Everyone is concerned about this FOMC meeting,” said Kim Youngsung, the head of fixed income in Seoul at Samsung Asset Management Co., South Korea’s largest private bond investor with the equivalent of $101.6 billion in assets. “Bernanke is going to taper in September. Interest rates are going up.” Yields (USGG10YR) on U.S. 10-year notes rose two basis points to 2.84 percent as of 10:36 a.m. in Tokyo, according to Bloomberg Bond Trader data. The 2.5 percent note due in August 2023 fell 1/8, or $1.25 per $1,000 face amount, to 97 2/32. Treasury yields touched 2.86 percent on Aug. 16, a level not seen since July 2011. A basis point is 0.01 percentage point. The S&P 500 dividend yield was 2.11 percent. Japan’s 10-year rate was little changed at 0.76 percent. Treasuries have fallen 3.6 percent this year, while Japan’s government securities returned 1 percent, based on the Bloomberg World Bond Indexes. Investors and analysts will be looking for clues in the minutes on when central bankers plan to trim their $85 billion in monthly asset purchases. Officials will probably begin to reduce bond buying next month, according to 65 percent of economists surveyed by Bloomberg from Aug. 9-13.
Posted on: Mon, 19 Aug 2013 10:46:51 +0000
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