Fed policy makers including Chairman Ben S. Bernanke have said they’ll maintain their $85 billion of monthly Treasury and mortgage debt buying until the labor market improves “significantly.” Minutes of their March meeting showed they discussed slowing the pace of purchases this year.
A report this week is forecast to show payrolls rose by 150,000, above the 88,000 gain in March, according to the median forecast of economists surveyed by Bloomberg News before the Labor Department reports the figure on May 3.
Gross domestic product rose at a 2.5% annual rate in the first quarter, following 0.4% in the previous three- month period, Commerce Department figures showed on April 26. The median estimate of economists surveyed by Bloomberg was for a 3% gain.
Amid global austerity efforts to cut borrowing, the bond market is clamoring for more debt, pushing yields on almost $20 trillion of government securities to less than 1%.
The average yield to maturity for the Bank of America Merrill Lynch Global Broad Market Sovereign Plus Index fell to a record-low 1.34% last week from 3.28% five years ago.
Even though the amount of bonds in the index has more than doubled to $23 trillion -- bigger than the gross domestic product of the U.S. and China combined -- the three-decade rally in bonds shows no sign of abating as gold, the world’s traditional store of value, sinks into a bear market and inflation slows.
Barclays Plc estimates that central banks will buy $2.5 trillion of assets considered to be safe this year as they inject cash into the global economy in an effort to stimulate growth. That’s up from $1.15 trillion of purchases in 2012 and outstrips net supply of $2 trillion, according to the London- based bank.