By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices slipped, pushing long-term yields up, on a quiet Friday that left investors only to adjust for expectations of more quantitative easing by the Federal Reserve.
There are no U.S. economic data scheduled, but the Fed will be buying debt maturing from 2013 through 2014 as part of a previously announced program to recycle maturing mortgage-related debt into the bond market. Analysts expect the central bank to buy about $2.5 billion. Show recent buyback results.
Yields on 10-year Treasury notes (UST10Y 2.57, +0.03, +1.14%) , which move inversely to prices, rose 2 basis points to 2.57%. A basis point is 0.01%.
Yields on 2-year notes (UST2YR 0.36, +0.00, +1.13%) were little changed at 0.36%, just 3 basis points away from an all-time low.
Yields on 30-year bonds (UST30Y 3.98, +0.02, +0.58%) rose 2 basis points to 3.98%.
The next meeting of the Federal Open Market Committee, the U.S. central bank’s policy-setting panel, is Nov. 2-3.
“The theme is simply that the market has discounted the onset of [quantitative easing] quite fully, which leaves us with limited upside until the November FOMC,” said strategists at CRT Capital Group. “By the very same token the downside is equally limited as no one knows how much or how frequently the Fed will buy and at the very least whatever they purchase will prove meaningful.”
Ten-year yields are little changed from last Friday.
Since the day before the last Fed policy meeting, which triggered markets pricing in much more bond buying by the central bank, 10-year yields have dropped from 2.71%.
Two-year yields have edged down from 0.37% a week ago, and down from 0.46% before the last FOMC meeting.
For the week, 30-year yields are up from 3.89%. They’ve risen from 3.76% in the last month.
The longest-dated debt sold by the U.S. has lagged the rally as some Fed officials have suggested quantitative easing to push inflation and inflation expectations higher. Higher inflation tends to weigh most heavily on long-term debt, because it reduces the value of fixed payments over that longer horizon.
