BLBG: U.S. Five-Year Notes Are Approaching `Extreme Over-Valuation,' UBS Says
Treasury five-year notes are approaching “extreme over-valuation,” according to UBS Securities LLC.
Fives are the “belle of the ball,” as Treasuries rally, UBS said in its report yesterday by analysts including Chris Ahrens in Stamford, Connecticut. The gains pushed the note “towards a position of extreme over-valuation,” according to UBS, one of the 18 primary dealers that are required to bid at the government debt sales.
Five-year yields declined two basis points today to 1.53 percent as of 1:12 p.m. in Tokyo, the lowest level in 16 months. Demand for the notes shrank the extra yield that they offer over two-year Treasuries to less than 1 percentage point for the first time since April 2009.
Investors including Tsutomu Komiya at Daiwa Asset Management Co. in Tokyo, part of Japan’s second-biggest brokerage, say they are favoring five-year debt because yields on shorter-term Treasuries are too low. The two-year rate dropped to a record 0.5143 percent yesterday.
To contact the reporters on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net
