Friday, 13 November 2015 03:12
NEW YORK: US Treasuries prices slipped on Thursday as selling linked to more corporate supply and $ 16 billion of 30-year bonds was mitigated by some safe-haven demand spurred by a sharp decline on Wall Street.
A heavy schedule of public speeches from top Federal Reserve officials did little to change traders’ view of a possible interest rate increase at the Federal Reserve’s Dec. 15-16 meeting.
“It’s mostly about taking down today’s supply,” said Subadra Rajappa, head of U.S. rates strategy at SG Corporate & Investment Banking in New York. “Nothing new came out of the Fed speeches today.”
U.S. interest rates futures implied traders see a 70 percent chance of a rate hike next month, compared with 72 percent on Tuesday and 6 percent a month ago, according to CME Group’s FedWatch program.
The U.S. bond market was closed on Wednesday for the Veterans Day holiday.
One of the Fed officials who spoke about monetary policy on Thursday said the risk of waiting too long was now roughly in balance with the risk of moving too soon to normalize rates after seven years near zero.
“I see the risks right now of moving too quickly versus moving too slowly as nearly balanced,” New York Fed President William Dudley said.
Worries about a possible rate hike, together with weaker commodity prices, hurt the stock market with the Standard & Poor’s 500 index losing 1 percent.
“The selloff in stocks has brought some safe-haven bids back into bonds. It’s taken some of the starch from the recent bond selloff,” said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York.
Last week, the two-year yield reached 0.958 percent, which was the highest in 5-1/2 years.
In late Thursday trading, benchmark 10-year Treasuries notes were down 2/32 in price to yield 2.322 percent, up 1 basis point from Tuesday.
The 30-year bond was little changed in price for a yield of 3.097 percent, up fractionally on the day.
Thirty-year bond prices found footing, paring earlier losses, after a solid 30-year bond sale, the last leg of this week’s $ 64 billion quarterly refunding.
This week’s refunding has been competing with the latest wave of corporate bond supply. So far this week, companies have raised more than $ 21 billion in the investment-grade credit market, according to IFR, a Thomson Reuters unit.
