FINALLY!...A BREAK!

June 15 (Bloomberg) -- U.S. Treasuries gained after a smaller-than-forecast increase in consumer prices boosted the appeal of 10-year notes, whose yields are near a five-year high.

Traders pared bets that the Federal Reserve's next move will be to lift interest rates in the next year. Treasuries still fell a sixth straight week, the longest slide since 2005.

``Inflation concern doesn't warrant higher yields at this point,'' said Sean Simko, who oversees $5.5 billion at SEI Investments Co. in Oaks, Pennsylvania. Simko bought five-year Treasuries this week after yields rose.

The yield on the benchmark 10-year note fell 7 basis points, or 0.07 percentage point, to 5.15 percent at 4:06 p.m. in New York, according to bond broker Cantor Fitzgerald LP. The price of the 4 1/2 percent security maturing in May 2017 rose more than 1/2, or $5 per $1,000 face amount, to 95 1/32. Prices move inversely to yields.

Ten-year note yields are up from 5.10 percent at the end of last week and reached 5.32 percent this week, the highest since April 2002, after former Federal Reserve Chairman Alan Greenspan said he expects an increase in benchmark yields and greater premiums on emerging-market debt.

In the past six weeks the 10-year yield, which determines interest rates on home mortgages and corporate loans, has climbed by about half a percentage point. Treasuries returned negative 1.2 percent this month through yesterday, according to Merrill Lynch & Co. index data.

No Rush

Consumer prices, excluding food and energy, rose 0.1 percent in May, after a 0.2 percent increase in April, the Labor Department said. The median forecast in a Bloomberg News survey of economists was for an increase of 0.2 percent. So-called core prices rose 2.2 percent from a year earlier, the smallest year- on-year increase since March 2006.

 

2 Comments on Treasuries Gain, Paring Weekly Decline, as Core Inflation Slows

JUN
16
2007
Great information thanks for sharing this kris.  
12:21am • #1
179,698 Points 1 Featured Post

Well written. Nice to see another knowledgeable mortgage guy!

 

David Kosmecki

http://www.americanstar.com

 
12:40am • #2


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Kris Krajecki Mortgage Broker Huntley, IL

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