Will funding record deficits and increasing rates cause falling bond investments?
*Bloomberg, by Susanne Walker & Matthew Brown, October 26, 2009:
“Treasuries Fall as U.S. Prepares Record $123 Billion Note Sales
Treasuries fell, with 10-year note yields touching their highest level
in two months, as the U.S. prepared to sell a record $123 billion of
notes to fund its stimulus program and record deficits.
Government securities declined for a fourth day before today's offering
of $7 billion in five-year Treasury Inflation Protected Securities, the
first of four note auctions this week. The Federal Reserve is likely to
end its $300 billion debt buybacks on Oct. 29.
‘The story for this week is the four auctions and that could be a bit
problematic,’ said David Ader, head of U.S. government bond strategy in
Stamford, Connecticut, at CRT Capital Group LLC.
The yield on the 10-year note increased eight basis points, or 0.08
percentage point, to 3.56 percent at 10:34 a.m. in New York, according
to BGCantor Market Data, the highest level since Aug. 24. The 3.625
percent security maturing in August 2019 fell 20/32, or $6.25 per
$1,000 face amount, to 100 18/32.
‘The momentum suggests we could move higher in yields,’ CRT's Ader
said. ‘If we break 3.52 percent, then the next projection is 3.76
percent. Resistance is at 3.28 percent.’
The 10-year yield will increase to 3.56 percent by year- end, according
to the average forecast of analysts in a Bloomberg survey, with the
most recent estimates given the heaviest weightings.”
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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