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 Post subject: Treasuries Halt Four-Day Gain Before GDP
PostPosted: Tue Aug 27, 2013 9:51 pm 
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Treasuries Halt Four-Day Gain Before GDP, Jobless Claims Data

By Mariko Ishikawa & Candice Zachariahs - Aug 27, 2013 9:44 PM ET

Treasuries fell, halting a four-day gain, before U.S. data forecast to show applications for unemployment benefits declined, bolstering the case for the Federal Reserve to pare stimulus as early as next month.

The five-year yield rose from the lowest in more than a week before a $35 billion auction today. Government bonds in Australia and Japan advanced as tension over possible military action in Syria boosted demand for haven assets. The jobless claims data will shape expectations for U.S. payrolls data due Sept. 6, according to Australia & New Zealand Banking Group Ltd. (ANZ)

“It’s interesting today that U.S. 10-years have weakened given the geopolitical backdrop,” said Tony Morriss, the Sydney-based head of interest-rate research at ANZ Bank. “Focus is already shifting to the payrolls number, which we consider to be most important in shaping expectations not only of the taper in September, which almost looks to be a done deal, but on projecting when the Fed might have sufficient confidence in the recovery to eventually lift short-term interest rates.”

The U.S. 10-year yield rose one basis point or 0.01 percentage point to 2.72 percent at 10:41 a.m. in Tokyo, after dropping 19 basis points in the previous four sessions, according to Bloomberg Bond Trader prices. The 2.5 percent benchmark note due in August 2023 fell 1/8 or $1.25 per $1,000 face value to 98 2/32.
Bond Auctions

The U.S. government is scheduled to sell $35 billion of five-year securities today and $29 billion of seven-year bonds tomorrow after $34 billion of two-year notes were sold at a lower-than-forecast yield yesterday.

The two-year notes drew a yield of 0.386 percent, compared with a forecast of 0.390 percent in a Bloomberg News survey of seven of the Federal Reserve’s 21 primary dealers. The bid-to-cover ratio rose to 3.21, the most since April.

The yield on the current two-year note was little changed at 0.38 percent. The five-year yield rose 2 basis points to 1.54 percent after touching 1.51 percent yesterday, the lowest in more than a week.

Investors bid for 2.46 times the amount of five-year notes on offer last month versus 2.45 at the June auction.

Revised figures from the Commerce Department tomorrow may show U.S. gross domestic product grew at a 2.2 percent annualized rate in the second quarter, compared with an initial estimate of 1.7 percent, according to the median projection of economists surveyed by Bloomberg.

Analysts in a separate poll expect a Labor Department report will show tomorrow initial jobless claims fell 5,000 to 331,000 in the week ended Aug. 24 from the previous period.
Fed Operation

The Fed will purchase up to $3.5 billion of notes today, according to the New York Fed website. The central bank’s debate about when to taper $85 billion in monthly bond buying has roiled financial markets around the world and sparked a selloff in fixed-income assets.

The U.S. central bank will vote to scale back stimulus at its Sept. 17-18 meeting, according to 65 percent of economists surveyed this month by Bloomberg.

Treasuries have fallen 0.5 percent this month, according to the Bloomberg U.S. Treasury Bond Index. (BUSY) German bunds have dropped 0.9 percent in the same period, while Japanese government bonds have returned 0.4 percent.

The U.S., France and Britain are constructing the legal groundwork to justify action on Syria that would demonstrate international censure against the use of chemical weapons.

Japan’s 10-year yield slid 1.5 basis points to 0.725 percent, after touching 0.72 percent, the lowest since Aug. 21. Australia’s 10-year yield dropped 4 basis points to 3.89 percent.

The MSCI Asia Pacific Index of shares fell 1.4 percent.

Bloomberg @ ... -data.html

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