Treasury bonds fell before tomorrow's meeting of Federal Reserve

Treasury bonds fell before tomorrow's meeting of Federal Reserve, pushing yields to 10 years to a maximum of six months on speculation Congress will support growth by passing the agreement of President Barack Obama to extend the tax cuts.

The extra yield investors demand to hold a 10-year debt in two years was the highest since April, as the Senate prepared to hold a procedural vote on a package of $ 858,000,000,000 tax cut that Obama and Republicans announced last week. ten-year notes also fell after falling last week by the most since August 2009, China refrained from increasing borrowing costs

"There is a greater likelihood that the tax bill will by the Senate and the House," said Ian Lyngen, government bond strategist at CRT Capital Group LLC in Stamford, Connecticut. "The Fed can go out and most likely some update on the sidelines of the ongoing assessment of the economy. It also has weighed on the bond market."

The yield on the benchmark 10-year-old won four basis points, or 0.04 percentage point to 3.37 percent at 9:18 am in New York, according to BGCantor Market Data. The price of 2,625 per cent security due in November 2020 fell 11/32, or $ 3.44 per $ 1,000 face amount, to 93 26/32. Past performance rose to 3.39 percent, the highest since June 3.

Two-year yields were little changed at 0.67 percent after rising to 0.69, the highest since June 1923. The difference between the two - and 10-year yields touched 2.73 percentage points, the widest on intraday basis since April 30.

Fed policy makers meeting tomorrow may be a sign that they are open to boost purchases of debt beyond the $ 600 billion already announced to stimulate job growth and prevent deflation.

Bernanke's view

Buy more government bonds is "certainly possible," said the chairman, Ben S. Bernanke, in an interview broadcast on CBS Corp. s "60 Minutes" on Dec. 5, referring to the Fed's policy of quantitative easing. "It depends on the effectiveness of the program" and the outlook for inflation and the economy, Bernanke said.

The Fed will buy about $ 105 billion in Treasury bonds over the next month, the New York Fed said in a program published on its website last week. The central bank will buy today $ 7 billion to 9 billion dollars of debt maturing in June 2016 to November 2017.

Treasury bonds fell last week, pushing 10-year yields by 31 basis points, after Obama agreed on 6 December to a two-year extension of current tax rates in exchange for another 13 months of unemployment benefits for long-term unemployed and cut the payroll tax by $ 120 million a year.

Pimco Outlook

Pacific Investment Management Co., which manages the largest bond fund, raised its forecast for U.S. growth in 2011, while regulators pump "large amount" of economic stimulus, Director General, Mohamed El-Erian said in an interview in December. 9.

Retail sales rose for the fifth consecutive month in November, increasing 0.6 percent, Americans began their holiday shopping, according to the median forecast of 62 economists in a survey before tomorrow's report from the Department of Commerce. Sales rose 1.2 percent in the previous month.

Production at factories, mines and utilities increased 0.3 percent in November, after stagnation in October, economists projected before a Fed report on 15 December.

Consumer spending excluding food prices and fuel prices rose 0.6 percent in November from a year earlier, matching October increase was the smallest annual increase on record, according to a survey before a Labor Department report on 15 December.

Unemployment rate

To sustain growth can be difficult without an improvement in the unemployment rate, which rose to a seven-month high of 9.8 percent in November.

Treasuries also fell today as the MSCI Asia Pacific index of shares rose 0.5 percent after China refrained from increasing borrowing costs for the weekend and instead ordered lenders to park more money in the central bank to counter inflation. March contracts, 500 of Standard & Poor's rose 0.4 percent.

As yields on U.S. bonds increasing at the fastest pace in over a year, the amount the government pays to service its record deficit is the lowest since 2005, compared with the size of the economy.

While interest costs rose 8 percent to 414 billion U.S. dollars in the fiscal year ended September 30, 383.4 billion U.S. dollars in 2009, fell to 2.7 percent of gross domestic product 3 1 percent, Treasury Department data show. That is the lowest in five years, when he was the same percentage, and below 3.6 percent in 2001, when the U.S. had passed a budget surplus.