BLBG:Treasuries Snap Decline Amid Efforts to Resolve Cyprus Crisis
Treasuries snapped a decline from yesterday as concern Cyprus’s banking crisis will worsen the euro area’s debt turmoil underpinned demand for safer assets.
U.S. government securities were supported as the European Central Bank said it will cut Cypriot banks off from emergency funds after March 25 unless the nation agrees on a bailout with international creditors. Federal Reserve policy makers said yesterday they will keep buying bonds at a pace of $85 billion a month to spur growth and reduce unemployment. Economists said a U.S. report today will show sales of previously owned homes increased last month.
“Treasuries are being supported by concerns about Cyprus and by the Fed statement yesterday,” said Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London. “There are concerns about the global economy and above all the euro zone. U.S. data will be the dictating force today.”
The benchmark 10-year yield fell one basis point, or 0.01 percentage point, to 1.96 percent at 9:33 a.m. in London after climbing six basis points yesterday, the biggest increase since March 7. The 2 percent note maturing in February 2023 rose 2/32, or 63 cents per $1,000 face amount, to 100 13/32.
Cyprus Deadlock
Cyprus is seeking to overcome a deadlock after lawmakers rejected a 5.8 billion-euro ($7.5 billion) levy on bank deposits imposed by the European Union as a condition for a 10 billion- euro rescue. Cypriot officials are asking Russia, which granted it a 2.5 billion-euro loan in December 2011, to delay repayment until 2021 and grant a new facility of 5 billion euros, Vedomosti newspaper reported, without citing anyone.
The ECB’s Governing Council decided to maintain its current level of Emergency Liquidity Assistance until March 25, the central bank said in an e-mailed statement. After that, ELA may only be considered if the EU and International Monetary Fund program is in place that would ensure the solvency of the concerned banks, it said.
U.S. existing home sales increased to a 5 million annual rate last month, the most since November 2009, according to the median estimate of economists surveyed by Bloomberg News before the report from the National Association of Realtors. Separate data will show home prices rose 0.7 percent in January from the previous month, economists estimate.
Other reports today will show claims for jobless benefits rose last week and manufacturing in the Philadelphia region contracted in March, the surveys show.
Treasuries handed investors a loss of 0.6 percent this year through yesterday, poised for the biggest quarterly decline since the three months ended March 2012, according to a Bank of America Merrill Lynch Indexes.
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
