BLBG:U.S. Treasuries Little Changed Before Michigan Report
Treasuries rose, with 10-year yields falling from the highest level in a week, as speculation U.S. lawmakers will fail to reach agreement on raising the nation’s debt ceiling revived demand for the safest securities.
Benchmark notes advanced for the fifth time in six days as the Federal Reserve prepares to buy as much as $1.75 billion of bonds maturing from February 2036 to November 2042 today as it struggles to restore growth in the world’s largest economy. U.S. House Republicans are weighing a short-term extension of the government’s borrowing authority as a way to spur President Barack Obama into negotiations on deeper spending cuts to entitlement programs.
“We are awaiting further developments on the debt-ceiling negotiations,” said Nick Stamenkovic, a strategist at RIA Capital Markets Ltd. in Edinburgh. “At the moment there is no real evidence that the two parties are getting closer” and that is underpinning demand for Treasuries, he said.
The 10-year note yield fell two basis points, or 0.02 percentage point, to 1.87 percent at 6:07 a.m. in New York, according to Bloomberg Bond Trader pricing. The 1.625 percent security due in November 2022 gained 1/8, or $1.25 per $1,000 face amount, to 97 27/32. The yield earlier increased to 1.89 percent, the highest level since Jan. 11.
Debt Ceiling
The new tactic from House Republicans was the subject of private meetings held yesterday during their retreat at a golf resort outside Williamsburg, Virginia. The lawmakers are seeking a strategy to meet a series of deadlines that Congress will face in the next 90 days.
They include the need to raise the country’s $16.4 trillion debt ceiling next month. Congress will also confront in March the $110 billion in automatic spending cuts, half from defense, that were put off in the Jan. 1 tax deal. On March 27, a short- term measure that funds government agencies will also lapse, creating another potential fight.
Treasuries declined in earlier trading before an industry report today that economists said will show a measure of U.S. consumer confidence rose in January.
The Thomson Reuters/University of Michigan consumer sentiment index advanced to 75 from a five-month low of 72.9 in December, according to a Bloomberg survey before the data is released at 9:55 a.m. New York time.
U.S. government securities slid yesterday as better-than- forecast reports on housing starts and jobless claims added to signs the economic recovery is strengthening.
Treasuries handed investors a 0.4 loss in the month ended yesterday, while bonds in an index of sovereign debt around the world declined 0.1 percent, according to Bank of America Merrill Lynch data.
More Beneficial
Fed Bank of Dallas President Richard Fisher said U.S. monetary policy is proving more beneficial to growth, while reiterating his opposition to a Fed decision to increase easing by purchasing more bonds.
“There is some traction now in the economy” from record- low interest rates, Fisher said in an interview yesterday in Washington. “We have a 2-plus-2 economy. Two percent inflation, a little bit less than that, 2 percent growth,” he said. The economy is “very different from what the Japanese have had for quite some time.”
The Federal Open Market Committee has pushed the main interest rate close to zero and expanded Fed assets to a record $2.97 trillion to fuel growth and reduce 7.8 percent unemployment. Policy makers are debating whether to continue stimulus this year.
To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
