Some US Treasuries posted slight losses on Friday, nudging yields up from their lowest levels in at least 60 years, but investors remained jittery before next week's global central bank conference.
--- Market still prone to quick turns
--- Eurozone, economic fears remain key market factors
"We've had some really big moves this week. It's hard to extend gains after what we've seen," said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco. "We're waiting for more data and then Bernanke next week."
The Federal Reserve will hold its annual global banking conference in Jackson Hole, Wyoming, starting at the end of next week, and markets are particularly keen to hear remarks from Fed Chairman Ben Bernanke. The benchmark 10-year note slipped 1/32 in price on Friday, its yield edging up to 2.07 percent after Thursday's rally in bond prices pushed yields down as far as 1.98 percent, their lowest in at least 60 years and down from 3 percent less than a month ago.
The 30-year Treasury bond continued to benefit from investors extending duration to capture a higher yield. It rose 20/32 in price, causing its yield to fall to 3.39 percent. It was the bond's biggest weekly gain since December 2008. Lingering fears about Europe's debt crisis and speculation about whether not Japanese authorities will intervene to halt the surge of the yen are among the market's concerns.
Perceptions about the US and the eurozone outlook are likely to guide trading until the Jackson Hole conference. Any news that undermines confidence in the economy or in the financial system would hurt stock prices and spur a bid for safe-haven US government debt.
Better-than-expected economic news could give the equity market a lift, though likely a brief one, which in turn, would damp demand for safe-haven US government debt. That leaves the Federal Reserve. US fiscal policy is now the prisoner of highly partisan politics so markets are focused on what monetary prescriptions Bernanke might offer in his talk at Jackson Hole.
The Fed can act, though it, too, is not fully insulated from partisan politics. This week the Bernanke was attacked by Texas Governor Rick Perry, a Republican presidential candidate, who said it would be "treasonous" if the Fed chairman "prints more money between now and the election" in November 2012. In an effort to encourage lending and spur economic activity, the Bernanke-led Fed has pursued one of the most extended periods of cheap money in US history, adding close to $3 trillion in US debt to its balance sheet in order to add liquidity to the financial system.
Comments
Comments are closed for this article.