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发表于 2009-7-27 02:52 PM
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Treasuries Fall as U.S. Begins Auctions, New Home Sales Rise
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By Cordell Eddings and Susanne Walker
July 27 (Bloomberg) -- Treasuries fell, pushing the yield on the 10-year note to the highest in over a month, as the U.S. began selling a record $115 billion in notes and new home sales rose the most in eight years.
Longer-maturity debt led the declines as new home sales rose 11 percent in June to a 384,000 annual pace, higher than any forecast of economists surveyed by Bloomberg News. The U.S. sold $6 billion in 20-year Treasury Inflation Protected Securities at a yield of 2.387 percent, higher than forecast. The Treasury will sell 2-, 5-, and 7-year notes over three days starting tomorrow.
“The market’s making the Treasury pay for things a little bit,” said Andrew Brenner, co-head of structured products and emerging markets in New York at MF Global Inc., a broker of exchange traded futures. “In some respects it’s a good thing because other parts of the economy are coming along.”
The yield on the benchmark 10-year note rose six basis points, or 0.06 percentage point, to 3.72 percent at 2:55 p.m. in New York, according to BGCantor Market Data. It touched 3.76 percent, the most since June 22. The 3.125 percent security maturing in May 2019 fell 15/32, or $4.69 per $1,000 face amount, to 95 5/32.
Economists forecast new home sales would rise to a 352,000 pace, according to the median of 62 projections in a Bloomberg News survey. The median price of a new home decreased 12 percent to $206,200 from $234,300 in June 2008.
Bid-to-Cover
“This report along with recent data on housing starts and existing home sales tells us the housing sector is finally in recovery mode,” wrote Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc., a primary dealer, in New York. “This will go a long way to eventually helping to stabilize the economy in the second half of this year.”
The 20-year TIPS sold today were forecast to draw a yield of 2.37 percent, according to the average forecast of five bond- trading firms surveyed by Bloomberg News.
The bid-to-cover ratio, which gauges demand by comparing the number of bids to the amount of securities sold, rose to a record 2.27 percent from 1.92 at the previous auction. Indirect bidders, an investor class that includes foreign central banks, bought 47.8 percent of the offering. The average for the previous five sales was 54.2 percent.
“The auction seemed fair,” said MF Global’s Brenner. “There was a decent amount of indirect bids.”
Foreign Central Banks
Today’s sale will be followed by a $42 billion two-year note auction tomorrow., a $39 billion five-year offering on July 29 and a $28 billion sale of notes maturing in seven years on July 30.
“Supply will still be the big focus today and this week,” said Martin Mitchell, head of government-bond trading at the Baltimore unit of Stifel Nicolaus & Co. “Demand at the auctions will be central.”
At the last sale of two-year notes, on June 23, the securities drew the most bids for a sale of that maturity since September 2007. Indirect bidders took the biggest share of the notes offered in at least six years.
Demand from indirect bidders increased to 30.4 percent of debt sold through auctions this year, from 21.6 percent in 2008, according to data compiled by the Treasury Department.
Committed to Measures
The U.S. has raised $1.046 trillion from debt sales this year, according to government data. The budget deficit is projected to reach $1.85 trillion in 2009, equivalent to 13 percent of the nation’s economy, according to the nonpartisan Congressional Budget Office. The government and the Fed have spent, lent or committed more than $12 trillion in a bid to revive the economy and credit markets.
Treasury Secretary Timothy Geithner said today the U.S. “was committed to taking measures” to shrink its budget deficit over the next four years and boost national savings, in opening remarks for Strategic and Economic Dialogue meetings with Chinese officials in Washington.
Geithner’s comments reinforced his efforts to reassure China, the largest foreign holder of American government debt with $801.5 billion, that this year’s record U.S. budget gap won’t pose a long-term danger.
Explaining Why
Treasuries are the cheapest relative to inflation since 1994 after consumer prices fell 1.4 percent in June from a year earlier. The real yield, or the difference between rates on government securities and the real cost of living in the economy, is 5.10 percent for 10-year notes, compared with an average of 2.74 percent over the past 20 years.
The gap helps explain why investors are buying bonds after they lost 4.8 percent this year, the steepest decline on record, according to Merrill Lynch & Co. indexes that date back to 1978. Holders have lost 0.3 percent this month, the indexes showed.
The expectation that borrowing costs will remain at record lows has caused the so-called yield curve to steepen. The difference between two-and 10-year yields is 267 basis points. It reached 270 basis points on July 20, the widest since June 5. The spread will narrow to 2.48 percentage points by the end of September, according to a Bloomberg survey with the most recent forecasts given the heaviest weighting.
A yield curve plots the rates of bonds of the same quality and different maturities. It steepens when yields on shorter- maturity notes fall, those on longer-dated bonds rise, or both happen simultaneously.
To contact the reporters on this story: Susanne Walker in New York at swalker33@bloomberg.net; Gavin Finch in London at gfinch@bloomberg.net.
Last Updated: July 27, 2009 15:08 EDT |
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