Treasuries fell for a second day before a $29 billion seven-year auction and a report economists said will show durable goods orders rose.
U.S. government securities due in 10 years and longer have handed investors a 6.3 percent loss in the past three months, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Only Greek bonds have done worse, based on changes in debt levels and currency rates, the indexes show.
Benchmark U.S. 10-year yields increased two basis points to 1.81 percent as of 6:40 a.m. in London, according to Bloomberg Bond Trader data. The price of the 1.625 percent note due in August 2022 fell 5/32, or $1.56 per $1,000 face amount, to 98 11/32. The record low was 1.38 percent on July 25.
“I just don’t think there’s any value in Treasuries,” said Roger Bridges, who oversees the equivalent of $15.5 billion of debt as head of fixed income at Tyndall Investment Management Ltd. in Sydney. “Growth isn’t as bad as people were expecting.” He favors shorter maturities, those that will fall least if yields increase.
Today’s auction will be the last of three note sales this week. The U.S. sold $35 billion of five-year debt yesterday and the same amount of two-year securities on Oct. 23.
Japan’s 10-year rate rose half of a basis point to 0.775 percent. It was as low as 0.72 percent on July 23, a level not seen since 2003. An auction of two-year Japanese government notes today drew the highest demand since June 2005.
Durable Goods
Japan’s central bank will consider increasing its asset- purchase program by 10 trillion yen ($125 billion) to 90 trillion yen at its Oct. 30 policy meeting, the Nikkei newspaper reported today.
Orders for U.S. durable goods probably rose 7.5 percent in September following a 13.2 percent slump in August that was the biggest since January 2009, according to the forecast of 77 economists surveyed by Bloomberg News. The Commerce Department report is scheduled for 8:30 a.m. New York time.
At the same time, Labor Department data may show claims for jobless benefits fell by 18,000 to 370,000 last week, another poll showed.
U.S. 10-year yields will rise to 2.06 percent by June 30, according to a Bloomberg survey of economists, with the most recent projections given the heaviest weightings.
To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
