NEW YORK: US Treasuries prices fell on Thursday as the minutes from the Federal Reserve's September policy meeting strengthened the view that the central bank would not raise interest rates this year, spurring investors to pile into stocks from bonds.
The minutes showed most Fed policymakers thought the US economy was close to warranting a rate hike in September, but worries about a global slowdown caused them not to make the move.
"There was a little fear before the minutes, but there were no surprises and the rebound in stocks puts pressure on fixed income," said George Goncalves, head of US rates strategy at Nomura Securities International in New York.
Investors parsed the minutes for details about why the central bank's policy-setting group, the Federal Open Market Committee, held rates steady. Some analysts concluded the global risks that worry the FOMC have persisted since the September meeting and last week's soft US payrolls data further diminished the likelihood the FOMC would raise rates by year-end.
"Barring a substantial pickup at the end of the year, the odds are long for rate hike in December," said Robert Tipp, chief investment strategist at Prudential Fixed Income and a manager of the $11 billion Prudential Total Return Bond Fund, in Newark, New Jersey.
Still, Fed members, including Chair Janet Yellen, have said since the last FOMC meeting that the Fed would end its near-zero interest rate policy by year-end if the economy showed further improvement.
The 10-year note and 30-year bond yields rose to one-week highs and the 10-year yield hit a 200-day moving average.
Prior to the release of the FOMC minutes, the government sold $13 billion in 30-year bonds to solid demand.
The last auction of the week came after a mediocre auction of three-year notes on Tuesday and a sale of $21 billion of 10-year notes to strong investor demand on Wednesday.
On the open market, benchmark 10-year Treasuries were down 12/32 in price to yield 2.100 percent, up 4 basis points from late on Wednesday.
The 30-year bond was down 1-1/2 points in price to yield 2.940 percent, up 5.5 basis points on the day.
Comments
Comments are closed.