Wednesday, June 10, 2009

have jumped from a record low of 2.04 percent on Dec. 18 on signs the steepest U.S. recession in 50 years is starting to ease

TO BE NOTED: From Bloomberg:

"Treasuries Advance as 10-Year Yield Near 4% Attracts Investors

By Wes Goodman

June 11 (Bloomberg) -- Treasuries rose as 10-year yields near 4 percent, the highest level since October, attracted investors betting the U.S. economic recession will last at least through the end of this quarter.

Ten-year yields, a benchmark for company and consumer borrowing costs, have jumped from a record low of 2.04 percent on Dec. 18 on signs the steepest U.S. recession in 50 years is starting to ease. The government is scheduled to auction $11 billion of 30-year bonds today, the last of three sales this week raising $65 billion.

“It’s quite attractive,” said Satoshi Okumoto, a general manager at Fukoku Mutual Life Insurance Co. in Tokyo, which has the equivalent of $58 billion in assets. “It’s going to be a bumpy recovery.” Fukoku Mutual bought Treasuries this month, Okumoto said.

The yield on the benchmark 10-year note fell two basis points to 3.93 percent as of 10:52 a.m. in Tokyo, according to BGCantor Market Data. The price of the 3.125 percent security maturing in May 2019 rose 5/32, or $1.56 per $1,000 face amount, to 93 13/32. The yield climbed to 3.9975 percent yesterday, the most since Oct. 16.

The Federal Reserve said the U.S. slump may be slowing in almost half of its regions, though the labor market is “weak,” in a report yesterday in Washington.

Debt Sales

Treasuries fell yesterday as the government sold $19 billion of 10-year notes and Russia said it may switch some reserves from U.S. debt.

The notes drew a yield of 3.99 percent at the sale, the highest since August 2008. A Russian central bank official said the nation may buy International Monetary Fund bonds.

“There are an awful lot of Treasuries being auctioned and there’s going to be more and more and more and more,” said Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management in Milwaukee.

Bond bulls said yields will lure some investors.

“Four percent’s going to be seen as a very good entry point,” said George Goncalves, chief fixed-income rates strategist in New York at Cantor Fitzgerald LP, one of 16 primary dealers that trade with the Fed. “It’s proving to be a good spot to draw out value players.”

To contact the reporter on this story: Wes Goodman in Singapore at"

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