The extra yield that investors demand to hold 30-year Treasuries instead of five-year notes was near an eight-week high before data that may show U.S. retail sales and industrial production rose last month.
The Federal Reserve announced plans yesterday to buy $45 billion of U.S. government debt a month from January and took the unprecedented step of linking stimulus measures to unemployment and inflation. The Treasury will auction $13 billion of 30-year debt today.
“The lack of appetite for longer-maturity debt signals investor confidence in the U.S. economic outlook,” said Hideki Shibata, a senior strategist for rates and currencies at Tokai Tokyo Research Center Co. “Because of the Fed’s purchases, yields are unlikely to rise for maturities of up to around five years, so the yield curve will probably steepen.”
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