Treasuries gain a second day amid impasse over U.S. debt ceiling

Above Target

Treasuries also rallied as economists said U.S. reports tomorrow will show retail sales rose at a slower pace in December and producer prices declined from the previous month.

Inflation may at times run modestly above the Fed’s 2 percent target, Fed Bank of Chicago President Charles Evans said today in Hong Kong.

The difference between yields on 10-year notes and similar- maturity TIPS, a gauge of expectations for consumer prices over the life of the debt, was 2.51 percentage points. The average over the past decade is 2.19 percentage points.

Fed Chairman Ben S. Bernanke is scheduled to speak at 4 p.m. today in Ann Arbor, Michigan.

U.S. consumer prices were unchanged in December from the month before, after falling in November, according to a Bloomberg News survey before the report on Jan. 16.

Yen Weakness

The yen fell to 89.67 per dollar, the weakest level since June 2010, on bets Japanese Prime Minister Shinzo Abe will select a central bank chief who will expand monetary easing, accelerating the currency’s decline.

Abe’s Liberal Democratic Party pledged to consider the foreign-securities fund, according to Nomura Securities Co. and Kazumasa Iwata, a former Bank of Japan deputy governor. JPMorgan Securities Japan Co. says the total may be as much 100 trillion yen. The purchases would further weaken a currency that has depreciated 12 percent in four months as the nation suffers through its third recession since 2008.

Treasuries have handed investors a loss of 0.5 percent this year through Jan. 11, according to indexes compiled by Bank of America Merrill Lynch. The gained 2.2 percent last year, the smallest annual return since 2009.

Bloomberg News

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