BLBG:Treasuries Drop for Third Day as Stocks Gain on Prospects of Euro Solution
Treasury 10-year notes fell for a third day, the longest streak in five weeks, as stocks gained globally on optimism European leaders are intensifying efforts to contain the region’s debt crisis.
The cost of insuring bonds in the Asia-Pacific region against default fell as European Union leaders prepared to meet today. Investor Jim Rogers said it is “absurd” to rank the U.S. among top-rated borrowers, after Fitch Ratings yesterday gave the nation’s debt a negative outlook while affirming its AAA grade. U.S. home prices probably fell at a slower pace and consumer confidence rose, economists said before reports today.
“We’re seeing a lot of risk assets starting to respond to what appears to be more determined effort to address some of the core issues in Europe,” said Tony Morriss, head of interest- rate research in Sydney at Australia & New Zealand Banking Group Ltd. “That would start to undermine longer-term, safe-haven support in some of the bond markets.”
U.S. 10-year rates increased two basis points to 1.99 percent as of 12:37 p.m. in Tokyo, according to Bloomberg Bond Trader prices. The 2 percent security due in November 2021 dropped 1/8, or $1.25 per $1,000 face amount, to 100 3/32, heading for the longest run of losses since the three days ended Oct. 24.
The MSCI (MXAP) Asia Pacific Index (MXWD) of shares rose 0.7 percent. The MSCI All Country World Index of stocks was little changed, after rallying 3.1 percent yesterday, the most in a month.
TED Spread
The TED spread, the difference between what lenders and the U.S. government pay to borrow for three months, shrank by one basis point to half a percentage point. It was the biggest narrowing in two weeks. The difference is still almost double this year’s average.
Japan’s 10-year yield declined 1.5 basis points to 1.05 percent after a government report showed the nation’s unemployment rate rose to 4.5 percent from 4.1 percent. The yield climbed to 1.065 percent yesterday, the most in almost three months.
European leaders are working toward a Dec. 9 summit meeting to regain investor confidence. Finance ministers from the 17- member monetary union meet in Brussels today to discuss how to strengthen the European Financial Stability Facility rescue fund.
The Markit iTraxx Japan index of credit-default swaps fell eight basis points, or 0.08 percentage point, to 2.02 percentage basis points, Deutsche Bank AG prices show. The decline was the most since Oct. 28, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. The Markit iTraxx Australia index fell five basis points to 2.12 percentage points, according to Westpac Banking Corp.
Property Values
The contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements.
The S&P/Case-Shiller index of property values dropped 3 percent in September from the same month in 2010, after decreasing 3.8 percent in August, according to the median forecast of economists surveyed by Bloomberg News. The Conference Board’s confidence index probably climbed to 44 this month from 39.8 in October, based on the responses.
The Fed is scheduled to buy as much as $2.75 billion of Treasuries due from 2036 to 2041 today as part of a plan announced in September to replace $400 billion in shorter maturities with longer-term debt to cap borrowing costs.
The U.S. lost its last stable outlook from the three biggest credit-ranking companies after Fitch lowered the nation to negative following a congressional committee’s failure to agree on deficit cuts. Standard & Poor’s cut its ranking for U.S. debt by one step to AA+ from AAA on Aug. 5. U.S. marketable debt has risen to a record $9.75 trillion.
“The U.S. is not triple A,” Jim Rogers, the investor and author of the book “Hot Commodities,” said in an interview on Bloomberg Television today. “That is absurd. The debts are rising by staggering rates.”
To contact the reporter on this story: Wes Goodman in Singapore at vwgoodman@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
