MW: Treasurys steady as Bernanke testifies to Congress
By Saumya Vaishampayan, MarketWatch
NEW YORK (MarketWatch) — Treasurys were steady on Tuesday as the market looked past Italy to Federal Reserve chairman Ben Bernanke’s testimony to Congress on monetary policy.
Yields on the benchmark 10-year U.S. Treasury note 10_YEAR +0.37% rose 1 basis point to 1.88%. Yields move inversely to prices and one basis point is one one-hundredth of a percentage point.
Bernanke indicated that he backed a continuation of the Fed’s asset purchases in prepared remarks to the Senate Banking Committee on Tuesday. The benefits of the program are “clear,” he said.
“Monetary policy is providing important support to the recovery while keeping inflation close to the FOMC’s 2% objective,” Bernanke said
The Federal Open Market Committee said in December it would continue asset purchases until the labor-market outlook improves substantially. The Fed is currently purchasing $85 billion in mortgage and government debt per month, including the $45 billion in Treasury purchases it added in December. Follow Bernanke’s testimony via MarketWatch’s live blog.
Bernanke isn’t saying much that poses a threat to its bond-buying program and yields may continue to hold steady, said David Ader, head of government bond strategy at CRT Capital Group.
“We sold off a little bit on the data and we’re sort of up a little bit post-Bernanke,” he said. “It’s not that exciting.”
Ten-year yields hit month-long lows Monday as the Italian parliamentary election proved inconclusive and market participants grew concerned about the so-called sequester, or up to $85 billion in federal budget cuts that will be automatically triggered on Friday if Congress and the White House cannot reach an agreement to avert them.
While a slew of economic data was released Tuesday and a $35 billion auction of 5-year notes is due, the Treasury market will most likely be dominated by Bernanke’s testimony, Ader said.
“Bernanke will probably prove to be the most relevant of the subjects here,” he said. “I would look to everything else as a side show.”
Yields on the 30-year Treasury bond 30_YEAR +0.03% were steady at 3.07% as were yields on the 5-year note 5_YEAR 0.00% at 0.764%.
Data released Tuesday showed that the recovery in the U.S. housing market isn’t slowing down. New U.S. home sales rose almost 16% in January to their highest level in more than four years, according to data released by the Commerce Department.
Data also showed a rise in U.S. home prices in December and the biggest yearly gain since 2006. The S&P/Case-Shiller home-price index registered a nonseasonally adjusted 0.2% rise in December compared with a 0.1% decline in November. Home prices rise in December, Case-Shiller says.
Saumya Vaishampayan is a MarketWatch reporter based in New York. You can find her on Twitter @saumvaish.
