Treasuries Rise; Bill Gross Rues Bet Against Debt
By Susanne Walker and Cordell Eddings - Aug 30, 2011 10:16 AM ET .
Reserve Joshua Roberts/Bloomberg
Treasuries extended gain after U.S. consumer confidence plunged in August to the lowest in more than two years as Americans’ outlooks for employment, incomes and business conditions worsened.
U.S. debt rose before the Federal Reserve releases minutes of its August meeting that will indicate the Fed’s view on the economy and discussions leading to the decision to set the Fed funds target rate until mid-2013.
Bill Gross, who runs the world’s largest bond fund, said the global economic crisis is leading to a possible “developed economy” recession in the U.S. and Europe, which may be hard to alleviate.
“The consumer confidence data was grossly weaker than expectations and consistent with what has been going on with weakening data of late,” said David Ader, head of government bond strategy at Stamford, Connecticut-based CRT Capital Group LLC. “We are back to levels that would be consistent with recessionary levels. Based on this alone, it look like we are in double-dipping territory and the Treasury market is rallying. Month-end extension is also helping the rally.”
Yields on benchmark 10-year notes dropped nine basis points, or 0.09 percentage point, to 2.17 percent at 10:06 a.m. in New York, according to Bloomberg Bond Trader prices. The 2.125 percent securities maturing in August 2021 rose 25/32, or $7.81 per $1,000 face amount, to 99 19/32. The 10-year note yield slid on Aug. 18 to a record low 1.97 percent.
Yields on 30-year bonds dropped eight basis points to 3.51 percent today. Two-year note yields fell two basis points to 0.19 percent.
The Conference Board’s index slumped to 44.5, the weakest since April 2009, from a revised 59.2 reading in July, figures from the New York-based private research group showed today. It was the biggest point drop since October 2008. Economists predicted the August gauge would fall to 52, according to the median forecast in a Bloomberg News survey.
Government bonds have returned 2.6 percent in August, the most since December 2008, according to a Bank of America Merrill Lynch index.
-- Editors: Paul Cox
To contact the reporters on this story: Susanne Walker in New York at swalker33@bloomberg.net; Cordell Eddings in New York at ceddings@bloomberg.net
DO SOMETHING!
| 