BLBG:Treasuries Rise as Obama Wins Presidential Election
Treasuries rose, heading for the biggest gain in a week, as President Barack Obama beat challenger Mitt Romney to win election to a second term.
Obama, a Democrat, backs the Federal Reserve, which has purchased $2.3 trillion of Treasuries and mortgage-related bonds and instituted plans to purchase $40 billion of home-loan securities a month to support the economy. Romney, a Republican, said he wouldn’t reappoint Fed Chairman Ben S. Bernanke to a third term in 2014. The U.S. plans to sell $24 billion of 10- year notes today.
“With Obama winning, we can expect the Fed to carry out current monetary policy,” said Hajime Nagata, who helps oversee the equivalent of $129.4 billion as an investor in Tokyo at Diam Co., a unit of Dai-ichi Life Insurance Co., Japan’s second- biggest life insurer. “The Fed is committed to a low interest- rate environment. If Romney had won, it would have been a game changer.”
U.S. 10-year yields slid six basis points, or 0.06 percentage point, to 1.69 percent as of 1:48 p.m. in Tokyo, according to Bloomberg Bond Trader prices. The 1.625 percent security due in August 2022 climbed 17/32, or $5.31 per $1,000 face amount, to 99 13/32. It was set for the biggest gain since Oct. 26.
Japan’s 10-year rate was little changed at 0.755 percent, matching the lowest level since August.
Election History
Ever since Lyndon B. Johnson defeated Barry Goldwater for the presidency in 1964, yields on 10-year Treasuries have dropped about 40 basis points in the first month when a Democrat wins, and risen 19 after a Republican victory, according to data compiled by Bloomberg.
“Treasury yields will go down” on an Obama victory, said Kim Youngsung, head of fixed income in Seoul at Samsung Asset Management Co., South Korea’s largest private bond investor with the equivalent of $103.8 billion, speaking prior to Obama’s victory.
The Treasury Department sold $32 billion of three-year notes yesterday and is scheduled to conclude this week’s auctions with a $16 billion 30-year bond sale tomorrow.
Greek Prime Minister Antonis Samaras faces a test of his coalition government today as he seeks parliamentary approval of austerity measures to unlock bailout funds amid the third general strike in six weeks and defections from his three-party coalition.
The last sale of 2022 Treasuries on Oct. 10 drew bids for 3.26 times the amount of debt offered, versus the average of 3.08 for the previous 10 auctions.
Yesterday’s three-year sale drew a yield of 0.392 percent, compared with a forecast of 0.383 percent in a Bloomberg News survey of nine of the Fed’s 21 primary dealers, those companies that underwrite the U.S. debt.
Investors submitted bids for 3.41 times the debt available, the least since April.
Indirect bidders, the investor class that includes foreign central banks, purchased 25.1 percent of the notes, the smallest amount since May 2007.
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.
