BLBG:Treasuries Advance on Bets Inflation Is Cooling, Euro Debt Crisis Concern
Treasuries rose for a third day before a government report that may show U.S. consumer prices were little changed last month and as the European Central Bank was said to buy Italian and Spanish bonds to cap yields.
The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of market expectations for consumer prices over the life of the debt, narrowed to 2.01 percentage points from a 2011 high of 2.67 percentage points in April. The U.S. consumer-price index didn’t climb for the first time in four months after rising 0.3 percent in September, according to the median forecast of 86 economists surveyed by Bloomberg News. Italian 10-year yields opened higher today before declining.
“Inflation data may help to underpin demand for Treasuries, but I think risk sentiment is the biggest driver at the moment,” said Lyn Graham-Taylor, a fixed-income strategist at Rabobank International in London. “People are concerned about the euro-zone debt crisis.”
U.S. 10-year yields fell three basis points to 2.02 percent as of 11:10 a.m. in London, according to Bloomberg Bond Trader prices. The 2 percent security maturing in November 2021 increased 9/32, or $2.81 per $1,000 face amount, to 99 27/32.
The Federal Reserve plans to sell as much as $8.75 billion of Treasuries due from 2013 to 2014 today, according its website. The central bank announced in September it would replace $400 billion of short-maturity debt with longer-term securities to contain borrowing costs.
The yield on Italy’s 10-year bonds fell 18 basis points to 6.89 percent and Spain’s declined four basis points to 6.29 percent as the ECB was said to buy the nations’ debt, according to at least two people with knowledge of the transactions, who declined to be identified because the deals are confidential. An ECB spokesman declined to comment.
To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
