By Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) — Treasury prices advanced on Wednesday after Federal Reserve Chairman Ben Bernanke said there’s no “preset course” for the central bank’s bond purchases.
The comments signaled the Fed would not rush to taper, or reduce, those extraordinary stimulus measures, which helped send benchmark bond yields to record lows last year.
The 10-year Treasury note 10_YEAR -1.93% yield, which moves inversely to price, was last down 4 basis points to 2.493% — leaving it around levels last seen two weeks ago.
Yields had been higher and prices had been lower before Bernanke’s prepared remarks were released at 8:30 Eastern.
The 30-year bond yield 30_YEAR -0.50% slid less than 2 basis points to 3.573%, while the 5-year note 5_YEAR -4.87% yield fell 6 basis points to 1.313%.
The Fed‘s proposed timetable for tapering its $85 billion-a-month bond-buying program is not set in stone, Bernanke said in his remarks before the House Financial Services Committee.
“I emphasize that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course,” he said.
Bernanke reiterated the Fed’s message that it will remain accommodative while watching the labor market and other aspects of the economy, said JR Rieger, head of fixed income indices at S&P Dow Jones Indices.
After markets became excited in May and June about possible changes in Fed policy, central-bank officials have spoken with caution, Rieger said.
“The Fed has been very careful subsequent to that to carefully articulate that it hasn’t decided to turn the spigot off,” he told MarketWatch.
The message has become boring, consistent and predictable, but bond markets like that kind of news, he added. Rieger also noted the significance of Bernanke’s question-and-answer session with lawmakers.
“It is that unpredictable portion of the comments that could move markets,” he said.
The Q&A session is now underway, and Treasury yields have lifted off their session lows as that started. Follow Bernanke’s testimony via MarketWatch’s live blog.
In economic news on Wednesday, the government said U.S. housing starts fell in June and missed expectations.
U.S. stocks also rose on Bernanke’s comments.
Victor Reklaitis is a New York-based markets writer for MarketWatch. Follow him on Twitter @VicRek.
