The world’s biggest bond dealers are showing almost no confidence in the best annual start for Treasuries since 2008.
While Treasuries climbed 1.4 percent this year, Goldman Sachs Group Inc., JPMorgan Chase & Co. and the other 20 primary dealers offered to sell $4.34 of the notes for every dollar the Federal Reserve purchased from the firms in its bond buying program in the past month, the highest since 2011, data compiled by Bloomberg show. Dealers slashed inventories more than 70 percent from a record in October to a two-year low.
The increased selling shows that bond dealers are becoming decidedly bullish on the world’s largest economy at a time when investors such as Pacific Investment Management Co. are questioning the strength of the U.S. recovery in the wake of reports on jobs growth, manufacturing and retail sales that fell short of analysts’ estimates. Primary dealers surveyed by Bloomberg predict the Treasury gains will turn into losses, pushing up yields on 10-year notes to 3.49 percent by year-end.
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