MW: Treasurys rise on Bernanke tailwind, before auctions
By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices mostly rose Monday, extending a rise in U.S. government debt prices into a second week ahead of $99 billion worth of new supply.
The 10-year note 10_YEAR -0.52% yield, which moves inversely to price, fell slightly on the day to 2.486%, while the 30-year bond 30_YEAR -0.31% yield fell 1.5 basis points to 3.548% and the 5-year note 5_YEAR +0.38% yield rose slightly 1.304%.
Federal Reserve Chairman Ben Bernanke said last week that the central bank wouldn’t scale back its bond purchases until the economy is ready, helping change market momentum, which had been adjusting to an expected wind-down in the program.
The benchmark 10-year note is now trading back in the same range as before a massive intraday selloff in the wake of a positive June payrolls report.
Bill Gross, co-chief investment officer at Pimco, reiterated the Fed’s dovish tone, saying in a tweet Sunday that he doesn’t expect the central bank to raise its short-term interest rates until 2016 at the earliest.
This week will see the release of housing data, including existing home sales for the month of June at 10 a.m. Eastern Monday. That may helping inform the Fed’s policy stance.
“Housing data will be in focus this week and any hint of weakness, such as that seen in the housing starts and permits data, could have an outsized impact on rates after Bernanke drew attention to housing data after the unexpected and dramatic rise in rates,” said Richard Gilhooly, U.S. director of interest-rate strategy at TD Securities, in a note
Market attention will also be focused on new supply this week, as the Treasury Department sells $99 billion of notes. That includes $35 billion in 2-year notes 2_YEAR -1.31% on Tuesday, $35 billion of 5-year notes on Wednesday, and $29 billion of 7-year notes 7_YEAR -0.53% on Thursday.
As earnings season ramps up, stock futures turned lower. The dollar fell against the yen, while gold and oil prices gained.
Municipal-bond market yields rose on Friday, dragged higher in part by the city of Detroit’s bankruptcy filing, the largest municipal bankruptcy petition ever filed.
Ben Eisen is a MarketWatch reporter based in New York.
