MW: Treasurys turn up; Europe may delay Greece aid
Fed meeting minutes most anticipated of Wednesday’s U.S. data
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices turned up slightly on Wednesday after Europe headlines raised the possibility of a further delay in keeping Greece solvent.
Yields on 10-year notes 10_YEAR +0.26% ,which move inversely to prices, slipped 1 basis point to 1.93%. A basis point is one one-hundredth of a percentage point.
Thirty-year bond yields 30_YEAR +0.10% declined 1 basis point to 3.09%.
Five-year note yields 5_YEAR +0.97% had dipped but lately rose 1 basis point to 0.83%.
Gains for global stocks and the euro came after comments by China’s top central banker, who said his nation plans to streamline and expand investment in Europe, including the European Financial Stability Facility — the euro zone’s bailout mechanism. Read more about China, Europe.
However, in early U.S. trading hours, reports said euro-zone finance officials are considering ways of delaying parts or even all of the second bailout program for Greece while still avoiding a disorderly default. The delay could be until after Greece holds elections, expected in April, according to Reuters. See more on possible Greek bailout delay.
“Greek headlines seem to be the dominant theme to the early strength,” said David Ader, head of government bond strategy at CRT Capital Group.
Euro-zone finance ministers are holding a conference call later Wednesday to discuss how to proceed, instead of convening a face-to-face meeting.
“Treasurys are pretty close to home despite China’s affirmations that they will help on European debt,” said bond strategists at RBS Securities. “Weighing against that was the announced postponement of a Eurogroup meeting on doubts over Greece’s commitment.”
U.S. data, Fed minutes
Treasury prices remained unchanged after the New York Federal Reserve’s Empire State manufacturing index rose more than expected this month, the first of several U.S. economic reports coming out during the session. Read story on Empire index.
The Treasury Department reported that overseas investors were net sellers of $16.6 billion of Treasurys in December, reversing some of the net purchases of $54 billion in November. See more on foreign selling of U.s. securities.
Perhaps the most anticipated event comes at 2 p.m. Eastern time: the minutes from the latest Federal Open Market Committee meeting. That’s when policy makers said economic conditions would likely “warrant exceptionally low levels for the federal funds rate at least through late 2014” — much longer than the Federal Reserve has previous said or investors had anticipated. Read Federal Reserve’s last policy statement.
Analysts will parse the minutes to discern any clues of how inclined officials are to begin another round of bond purchases — called quantitative easing — or whether that would be focused on Treasurys or mortgage-related debt.
At his press conference after last month’s meeting, Fed Chairman Ben Bernanke said that the question of quantitative easing remained “on the table,” and that the U.S. central bank was “prepared to take further steps if we see that the recovery is faltering or if inflation is not moving toward target.”
Deborah Levine is a MarketWatch reporter, based in New York.
