Investors sold bonds as traders speculated that the cash infusion will help the biggest U.S. bank by assets replenish capital after writedowns related to subprime mortgage losses. The pledge from the Mideast emirate calmed investors who yesterday drove two-year note yields to the lowest level since December 2004.
The Treasury will offer $20 billion of two-year notes tomorrow and $13 billion of five-year securities Nov. 29.
Bets are on that FED will lower its target rate for overnight lending between banks by a quarter-percentage point on Dec. 11. - The date that they next meet.