castanyes blaves

Random ramblings about some random stuff, and things; but more stuff than things -- all in a mesmerizing and kaleidoscopic soapbox-like flow of words.


U.S. 10-Year Treasury Notes Fall After $13 Billion Auction

May 11 (Bloomberg) -- U.S. 10-year Treasuries fell the most in more than a week after the government sold $13 billion of the securities, adding supply at a time when the Federal Reserve is signaling that it may raise interest rates further.

Investors pushed yields higher even after a Commerce Department report showed retail sales in April rose less than forecast. Fed policy makers yesterday boosted their target rate to 5 percent from 4.75 percent and said ``further policy firming may yet be needed.''

``Since the Fed's statement, the market has been left with a bearish tone,'' said Mustafa Chowdhury, head of U.S. interest- rate research at Deutsche Bank AG in New York. The firm is one of the 22 primary dealers of U.S. government securities that are obligated to bid at the auctions. ``The prospect of more rate increases is significant for investors.''

The yield on the benchmark 10-year note rose 5 basis points, or 0.05 percentage point, to 5.17 percent at 1:26 p.m. in New York, according to bond broker Cantor Fitzgerald LP. Yields move inversely to bond prices. The price of the 4 1/2 percent security due in February 2016 fell almost 3/8, or $3.75 per $1,000 face amount, to 94 7/8, the biggest drop since May 1.

The securities sold today drew a yield of 5.14, the highest yield since May 2002. For every $1 sold, there was $2.53 worth of bids, down from $2.87 at March's sale. Indirect bidders, a group that includes foreign central banks, bought 30.7 percent of the securities. Since the Treasury began releasing such data in May 2003, the share of 10-year notes won by indirect bidders has ranged from 2.9 percent to 54.7 percent.

Ten-year Treasuries have lost 4.3 percent this year, compared with a gain of 1.4 percent at this point in 2005, according to Merrill Lynch & Co. index data.

Treasury notes (or T-Notes) mature in one to ten years. They have a coupon payment every six months, and are commonly issued with maturities dates of 2, 3, 5 or 10 years, for denominations from $1,000 to $1,000,000. T-Notes and T-Bonds are quoted on the secondary market at percentage of par in thirty-seconds of a point. Thus, for example, a quote of 95.7 on a note indicates that it is trading at a discount: $952.19 for a $1,000 bond.

The 10-year Treasury note has become the security most frequently quoted when discussing the performance of the U.S. government-bond market and is used to convey the market's take on longer-term macroeconomic expectations. It is also important to the U.S. mortgage market, which uses the yield on the 10-year Treasury note as a benchmark for setting mortgage interest rates.

Comments: Post a Comment

Subscribe to Post Comments [Atom]

<< Home


200409   200412   200501   200502   200503   200504   200505   200506   200507   200508   200509   200510   200511   200512   200601   200602   200603   200604   200605   200606   200607   200608   200609   200610   200611   200612   200701   200702   200703   200704   200705   200707   200708   200709   200710   200711   200712   200801   200802   200803   200804   200805   200806   200807   200808   200809   200810   200811   200812   200901   200902   200903   200904   200905   200906   200907   200908   200909   200912   201001   201002   201003   201004   201007   201009   201011   201102  

This page is powered by Blogger. Isn't yours?

Subscribe to Posts [Atom]