Treasuries gain as yields at almost 11-month high lure investors

Data ‘Disappointment’

U.K. production fell 1.2% from December, when it rose 1.1%, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 29 economists was for a 0.1% increase. Manufacturing output also declined, falling 1.5%.

Global stocks fluctuated, and the Standard & Poor’s 500 Index declined 0.2%.

“There’s a little bit of disappointment about the economic figures around the globe, and that’s supportive of Treasuries,” said Ralf Umlauf, head of floor research at Landesbank Hessen- Thueringen in Frankfurt. “We are seeing weaker equity markets as well as bad figures from U.K. industrial production. In the medium-term, yields should rise because the U.S. will show moderate growth.”

U.S. retail sales advanced in February for a fourth month, rising 0.5%, according to the median estimate of economists in a Bloomberg News survey before the Commerce Department reports the figure tomorrow.

Fed Purchases

Government data on March 8 showed the U.S. economy gained 236,000 jobs in February, versus 165,000 projected by a Bloomberg News survey of economists. The unemployment rate unexpectedly fell to 7.7%, from 7.9%.

The Fed is purchasing $85 billion of Treasury and mortgage debt each month under the quantitative-easing stimulus strategy to fuel growth by putting downward pressure on yields. The central bank will buy today as much as $1.5 billion in Treasury Inflation Protected Securities maturing from April 2017 to February 2043.

Treasuries trading volume dropped yesterday to $185 billion, the least since touching a 2013 low of $183 billion on March 4, according to ICAP Plc, the largest inter-dealer broker of U.S. government debt. Volume increased to $384 billion on March 8, the highest since Feb. 26. Average daily Treasuries volume for the past year is $248 billion.

Bloomberg News

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