Treasuries gained as benchmark yields about six months investors attracted high amid speculation that the Federal Reserve next week's sign that he is considering adding to its program of 600 billion U.S. dollars of LBO .
Ten years following notes rose the highest two-day plunge in two years, the extra yield offered by Treasury bills to 10-year Japanese government bonds widened to more than five months, increasing the attractiveness of U.S. assets . Fed officials will meet on Dec. 14 after announcing its purchase program of the Treasury at its last meeting on 3 November. Thirty-year bonds were little changed before the Treasury auctions $ 13 billion in present value, to complete the week of 66 billion U.S. dollars of the note and bond sales.
"Bonds are finding some support after sharp selloff," said Kornelius Purps, fixed income strategist at UniCredit SpA in Munich. "There are some expectations that the Fed could expand its quantitative easing program, in the meeting next week. The auction of 30 years is a risk, but could be a supporting factor later, as yields at around 4 , 5 percent may represent a buying opportunity. "
The yield on the benchmark 10-year bond fell four basis points to 3.24 percent as of 9:39 am in London. The guarantee of 2,625 percent due November 2020 rose 10/32, or $ 3.13 per $ 1,000 face amount, to 94 27/32. The yield rose to 3.33 percent yesterday, the highest level since June 4.
The 30-year yield was little changed at 4.45 percent, after rising 4.50 percent yesterday, the highest since May 13.
ten-year yields rose 35 basis points in the last two days, the biggest such increase since September 2008, when financial markets were roiled by the bankruptcy of Lehman Brothers Holdings Inc.
"It's certainly possible"
Buy more U.S. government bonds which has already announced it is "certainly possible", said the Fed chairman, Ben S. Bernanke, in an interview broadcast on December 05, s of CBS Corp. "60 Minutes" program. "It depends on the effectiveness of the program" and the outlook for inflation and the economy, Bernanke said.
Some economists said that Fed officials may signal the intention to halt any rapid increase in yields. The Central Bank purchases of debt is intended to reduce interest rates in the long term, making it cheaper for companies to purchase new equipment and for consumers to buy houses and cars.
"Financial markets, in particular, long-term yields have risen this far, so the Fed could discuss ways of communication that calm," said Hiroki Shimazu, an economist in Tokyo at Nikko Cordial Securities Inc. , a unit of Sumitomo Mitsui Financial Group Inc., Japan's third-largest bank by assets traded. "You could put the communication in the declaration must yield increases to become too one-sided."
Extra Performance
The extra yield, or spread, offered by Treasury bills to 10-year maturity bonds similar to Japan rose to 2.04 percentage points yesterday, the widest since June 15. 10-year yields in Japan rose to 1.27 percent today, the most since June 4. The spread was 2 percentage points today.
"Yields well above the 3 percent is likely to be very attractive to Japanese investors," said Satoshi Okumoto, who helps manage the equivalent of $ 68 million as CEO of fukoku Mutual Life Insurance Co. in Tokyo . "We see buying them."
Treasury bonds have handed investors a return of 5.8 percent this year, according to Bank of America Merrill Lynch data. Japanese debt increased by 1.3 percent, the indexes show.
The gain in Treasuries was diluted to a U.S. report said today that economists are jobless claims fell.
"Massive Sales"
Jobless claims likely declined by 11,000 to 425,000 in the week ended Dec. 4. The index of Thomson Reuters / University of Michigan preliminary consumer sentiment rose to 72.5 in December from 71.6 the previous month, a separate survey showed before the figures are published tomorrow.
"The good economic news may keep Treasuries around these levels or push northward, but the settlement is likely to run out of steam not far from here," said Roger Bridges, who oversees the equivalent of $ 15.7 thousand million in Sydney as head of fixed-income at Tyndall Investment Management Ltd., part of Australia's largest insurer.
The 30-year bonds sold today yielded 4.44 percent in pre-auction, compared with 4.32 percent in vehicle sales and 10 November. Investors bid for 2.31 times the amount offered last month, compared with 2.49 times on 14 October.
'Dicey' auction
"An auction of 30 years after a sell-off may be a bit risky," said Bridges.
In the 10-year auction yesterday, the title has a yield of 3.34 percent, compared with the average forecast of 3,307 percent in a survey of primary dealers, firms required to participate in sales government debt.
Prospective ten-year Treasury note may fall below 119 after breaking below 121 14/32-121 16/32, a key support area, Societe Generale SA, said, citing technical indicators.
The straw that "began in 128 1 / 32 in early November is probably stronger than we thought initially," Societe Generale analyst Hugues Naka and Manac'h technical Fabien in Paris, wrote in a research note today day.
The Department's 10-year Treasury futures contract due in March 2011 was little changed at 120 24/32. It was 120 4 / 32 yesterday, the lowest since June 22.
The difference between yields on U.S. 10 years and Treasury inflation-protected securities, an indicator of expectations operator in consumer prices during the life of the securities is known as the breakeven rate, little changed today at 2.21 percentage points after increase to 2.29 percentage points yesterday, the widest since May 13.
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