As we have discussed Dow Low Retest and VIX picture are giving a good chance to Form powerful Reversal in US Dollar - Double Top. Everybody needs a weaker dollar, it is time to remember old word - Inflation. Nobody wants 30 year Treasuries at Yield below 5% - if it is a surprise it is not on this blog for sure."By Cordell Eddings and Sandra Hernandez
Nov. 13 (Bloomberg) -- Treasuries fell, led by 30-year bonds, after investors shunned the government's $10 billion sale of the securities amid concern that U.S. debt sales will grow.
The bonds drew a yield about 9 basis points above the level in pre-auction trading. At 4.31 percent, it was still the lowest since regular sales of the security began in 1977. Investors have been favoring shorter-term debt, which serves as a haven in times of turmoil and a bet the Federal Reserve will lower interest rates. The U.S. sold $34 billion in four-week bills yesterday at the lowest rate on record.
``The 30-year is not a central bank product, and there's no real interest from pension funds'' at a yield below 4.5 percent, said Andrew Brenner, co-head of structured products in New York at MF Global Ltd., the world's largest broker of exchange-traded futures and options contracts. ``There's just no interest in it.''
The yield on the 30-year bond climbed 18 basis points, or 0.18 percentage point, the most since Sept. 30, to 4.35 percent at 4:17 p.m. in New York, according to BGCantor Market Data. The 4.5 percent security due in May 2038 plunged 3 1/32, or $30.31 per $1,000 face amount, to 102 1/2.
Ten-year note yields increased 13 basis points, the most since Oct. 28, to 3.87 percent. The two-year note's yield rose 8 basis points, the most in three weeks, to 1.24 percent.
The rate on the one-month bill was 0.05 percent, near yesterday's record low.
`Too Many Unknowns'
The bond auction followed yesterday's sale of $20 billion in 10-year notes. The $30 billion total of the two auctions is the biggest amount of the securities sold in a week since at least 1990, when Bloomberg began tracking the data.
The gap between yields on two- and 10-year government notes widened to 2.64 percentage points, the largest since October 2003. Traders yesterday pushed two-year note yields to the lowest level in five years, while the Treasury's sale of $25 billion of three-year notes on Nov. 10 attracted the highest level of investor bids relative to the amount offered since 1998.
``In the current market environment there are still too many unknowns,'' said William Larkin, a portfolio manager at Cabot Money Management in Salem, Massachusetts, which manages about $500 million in assets. ``People are looking for the safety of the shorter-term securities.''
30-Year Sale
Today's bond auction forecast to draw a yield of 4.224 percent, according to the average estimate of seven bond-trading firms surveyed by Bloomberg News. The bid-to-cover ratio, which gauges demand by comparing the number of bids to the amount of securities sold, was 2.07, below the average of 2.19 times in the nine auctions since the bond was revived in 2006.
Indirect bidders, a class of investors that includes foreign central banks, bought 18 percent of the securities offered, down from 43 percent at the last sale.
The sale was a reopening, meaning the bonds pay interest at the same rate and mature on the same date as those in the August auction. They mature in May 2038.
Futures on the Chicago Board of Trade show an 80 percent chance the Fed will lower its 1 percent target rate for overnight bank lending by a half-percentage point at its Dec. 16 meeting. The odds were 58 percent a week ago.
The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, was 1.96 percentage points, compared with 4.57 percentage points a month ago.
Record Deficit
The federal budget deficit in October, the first month of fiscal 2009, climbed to a record $237.2 billion, spurred by U.S. purchases of stakes in some of the country's largest banks. It exceeded the budget shortfall for President George W. Bush's first full year in office.
Banks and securities companies globally have reported almost $1 trillion of losses and writedowns tied to a meltdown in the credit markets since the start of 2007. The U.S., Japan, the U.K. and the euro region are headed for their first simultaneous recessions since World War II, according to the International Monetary Fund.
Initial claims for U.S. unemployment insurance rose last week to the highest level since September 2001, when the economy was last in a recession. They increased to a larger-than- forecast 516,000 in the week ended Nov. 8, from a revised 484,000 the prior week, the Labor Department said today in Washington.
``The jobs data isn't having much impact on the market,'' said Theodore Ake, the head of Treasury trading in New York at Mizuho Securities USA inc., another primary dealer. ``The weakness in the economy is not a surprise. We know we are heading into a recession.''
To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net; Sandra Hernandez in New York at shernandez4@bloomberg.net."
Nov. 13 (Bloomberg) -- Treasuries fell, led by 30-year bonds, after investors shunned the government's $10 billion sale of the securities amid concern that U.S. debt sales will grow.
The bonds drew a yield about 9 basis points above the level in pre-auction trading. At 4.31 percent, it was still the lowest since regular sales of the security began in 1977. Investors have been favoring shorter-term debt, which serves as a haven in times of turmoil and a bet the Federal Reserve will lower interest rates. The U.S. sold $34 billion in four-week bills yesterday at the lowest rate on record.
``The 30-year is not a central bank product, and there's no real interest from pension funds'' at a yield below 4.5 percent, said Andrew Brenner, co-head of structured products in New York at MF Global Ltd., the world's largest broker of exchange-traded futures and options contracts. ``There's just no interest in it.''
The yield on the 30-year bond climbed 18 basis points, or 0.18 percentage point, the most since Sept. 30, to 4.35 percent at 4:17 p.m. in New York, according to BGCantor Market Data. The 4.5 percent security due in May 2038 plunged 3 1/32, or $30.31 per $1,000 face amount, to 102 1/2.
Ten-year note yields increased 13 basis points, the most since Oct. 28, to 3.87 percent. The two-year note's yield rose 8 basis points, the most in three weeks, to 1.24 percent.
The rate on the one-month bill was 0.05 percent, near yesterday's record low.
`Too Many Unknowns'
The bond auction followed yesterday's sale of $20 billion in 10-year notes. The $30 billion total of the two auctions is the biggest amount of the securities sold in a week since at least 1990, when Bloomberg began tracking the data.
The gap between yields on two- and 10-year government notes widened to 2.64 percentage points, the largest since October 2003. Traders yesterday pushed two-year note yields to the lowest level in five years, while the Treasury's sale of $25 billion of three-year notes on Nov. 10 attracted the highest level of investor bids relative to the amount offered since 1998.
``In the current market environment there are still too many unknowns,'' said William Larkin, a portfolio manager at Cabot Money Management in Salem, Massachusetts, which manages about $500 million in assets. ``People are looking for the safety of the shorter-term securities.''
30-Year Sale
Today's bond auction forecast to draw a yield of 4.224 percent, according to the average estimate of seven bond-trading firms surveyed by Bloomberg News. The bid-to-cover ratio, which gauges demand by comparing the number of bids to the amount of securities sold, was 2.07, below the average of 2.19 times in the nine auctions since the bond was revived in 2006.
Indirect bidders, a class of investors that includes foreign central banks, bought 18 percent of the securities offered, down from 43 percent at the last sale.
The sale was a reopening, meaning the bonds pay interest at the same rate and mature on the same date as those in the August auction. They mature in May 2038.
Futures on the Chicago Board of Trade show an 80 percent chance the Fed will lower its 1 percent target rate for overnight bank lending by a half-percentage point at its Dec. 16 meeting. The odds were 58 percent a week ago.
The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, was 1.96 percentage points, compared with 4.57 percentage points a month ago.
Record Deficit
The federal budget deficit in October, the first month of fiscal 2009, climbed to a record $237.2 billion, spurred by U.S. purchases of stakes in some of the country's largest banks. It exceeded the budget shortfall for President George W. Bush's first full year in office.
Banks and securities companies globally have reported almost $1 trillion of losses and writedowns tied to a meltdown in the credit markets since the start of 2007. The U.S., Japan, the U.K. and the euro region are headed for their first simultaneous recessions since World War II, according to the International Monetary Fund.
Initial claims for U.S. unemployment insurance rose last week to the highest level since September 2001, when the economy was last in a recession. They increased to a larger-than- forecast 516,000 in the week ended Nov. 8, from a revised 484,000 the prior week, the Labor Department said today in Washington.
``The jobs data isn't having much impact on the market,'' said Theodore Ake, the head of Treasury trading in New York at Mizuho Securities USA inc., another primary dealer. ``The weakness in the economy is not a surprise. We know we are heading into a recession.''
To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net; Sandra Hernandez in New York at shernandez4@bloomberg.net."
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