BLBG:Treasuries Fall on Speculation Fed Will Act Today to Stem Market Turmoil
Treasuries declined, pushing yields up from the lowest since 2009, amid speculation the Federal Reserve may introduce new measures to boost financial confidence.
Benchmark 10-year bonds pared their drop as European stock markets extended their decline. Fed Chairman Ben S. Bernanke and his colleagues meet today and may prolong a pledge to maintain record stimulus, according to economists at JPMorgan Chase & Co., BNP Paribas SA and Goldman Sachs Group Inc. Standard & Poor’s U.S. credit-rating downgrade last week provoked a rout in global equities and sent Treasuries surging yesterday. The U.S. is selling $32 billion of three-year notes today.
“There’s a lot of speculation about the possibility of more easing from the Fed,” said Philip Marey, a senior U.S. strategist at Rabobank Groep in Utrecht, Netherlands. “There’s a bit of a correction in Treasury yields after the fall we saw yesterday. I think they will use this meeting to try and calm the markets without pulling the trigger on more bond purchases. They will indicate that they are willing to launch more quantitative easing if the situation deteriorates.”
The 10-year yield climbed five basis points to 2.36 percent at 10:15 a.m. in London, and earlier surged as much as 12 basis points, according to Bloomberg Bond Trader prices. The yield slid 24 basis points yesterday. The 3.125 percent security due in May 2021 fell 14/32, or $4.38 per $1,000 face amount, to 106 18/32.
Two-year yields were little changed at 0.26 percent. The 10-year yield had slipped to 2.27 percent, the lowest since Jan. 6, 2009, before European stock markets opened.
The Stoxx Europe 600 Index tumbled 3.6 percent, erasing a gain in early trading. The pan-European equity benchmark has tumbled for eight consecutive days, the longest losing streak since 2003.
To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net.
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.
