Bloomberg News

Treasuries Snap Loss on Speculation Data to Show Exports Slowed

October 12, 2011

Oct. 13 (Bloomberg) -- Treasuries snapped a six-day loss before a government report that analysts said will show the U.S. trade deficit deepened as a slowing global economy curbed American exports.

The U.S. plans to auction $13 billion of 30-year bonds today, the last of three sales of coupon-bearing debt this week totaling $66 billion. Signs of improvement in the U.S. economy and European efforts to tackle a debt crisis in the region interrupted a rally that sent yields to a record low last month.

“Treasury yields will fall again,” said Masazumi Fukuoka, a senior dealer at the Singapore branch of Mitsubishi Trust & Banking Corp., a unit of Japan’s largest publicly traded lender. “I don’t believe there’s recovery in the economy, and there’s still concern over Europe.”

Benchmark 10-year notes yielded 2.21 percent as of 9:48 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 2.125 percent security due in August 2021 changed hands at 99 9/32.

The rate has risen 45 basis points, or 0.45 percentage point, in the past six sessions. The record low was 1.67 percent on Sept. 23.

The U.S. trade deficit probably widened 2.2 percent in August from July to $45.8 billion, according to the median of forecasts in a Bloomberg News survey. Jobless claims rose last week, a separate government report today will show, based on other surveys.

European Plan

Treasuries fell yesterday, pushing 10-year note yields to the highest level in six weeks, as optimism European leaders will be able to contain the region’s debt crisis reduced the haven appeal of the securities at a $21 billion auction.

European Commission President Jose Barroso called for a reinforcement of crisis-hit banks, the payout of a loan to Greece and a faster start for a permanent rescue fund to alleviate Europe’s debt woes, addressing the European Parliament in Brussels yesterday.

U.S. government securities have fluctuated as European officials attempt to tackle the debt crisis, which has pushed Greece toward default, threatened to curb world economic growth and fueled speculation that the 17-nation currency may not survive in its current form.

--Editors: Nate Hosoda, Rocky Swift

To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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