Bank of Japan, U.S. data, European banks share spotlight
By Deborah Levine, MarketWatch
SAN FRANCISCO (MarketWatch) — Treasury prices rose for a third day on Wednesday, pushing yields down, as investor concerns about European banks grew, U.S. housing data was middling and the Bank of Japan joined other central banks in easing monetary policy.
Yields on 10-year notes 10_YEAR -1.65% , which move inversely to prices, fell 3 basis points to 1.78%. A basis point is one one-hundredth of a percentage point.
While the daily moves have been fairly small, the benchmark security’s yield hasn’t fallen for three straight days since a period ended Aug. 23.
Thirty-year yields 30_YEAR -0.93% slipped 3 basis points to 2.97%, heading back under 3%.
In an earlier move than many expected, the Bank of Japan increased the size of its asset-purchase program — to 80 trillion yen ($1.01 trillion) from 70 trillion yen. Read story on Bank of Japan easing.
The Bank of Japan’s decision comes less than a week after the Federal Reserve announced it would embark on a third round of quantitative easing to underpin the U.S. recovery. Also, the European Central Bank recently said it would buy the debt of countries who request an international bailout, while the Bank of England is also seen as likely to ease further. That means all of the big four are easing.
“While we in our guts look at the Fed and lament its dollar debasing QE and perhaps enhanced tolerance for inflation as the recovery strengthens, everyone else is leap-frogging to debase themselves just as much, if not more,” bond strategists at CRT Capital Group wrote in a note. “So we’re merely a relative performer which is, against Europe and Japan at least, in somewhat better economic shape.”
Indeed, analysts also highlighting reports pointing to positives in the real estate sector, including hotel construction and improvement in one of the hardest hit housing markets: Las Vegas. See wsj.com story on hotel construction.
Also possibly boosting demand for U.S. Treasury bonds, Barclays and RBS noted reports that China may opt to alter its buying of Japanese government bonds, known as JGBs, as tensions between Japan and China remain high. Read more on China, Japanese bonds.
And as for Europe, the latest reports point to rifts between countries on how to structure a pan-European banking authority -- something many investors see as crucial to restoring confidence in the euro zone. Read Reuters on Germany, bank supervision.
Deborah Levine is a MarketWatch reporter, based in San Francisco.
