US Treasuries Little Changed Before Bullard Debate

Treasuries were little changed, following a six-week decline, before Federal Reserve Bank of St. Louis President James Bullard speaks today as policy makers debate whether to reduce the central bank’s stimulus program.

U.S. reports last week showed payrolls rose, while the jobless rate increased. The Treasury is scheduled to sell $66 billion in notes and bonds this week, beginning with $32 billion in three-year debt tomorrow. Bullard said last month he wants to continue the current pace of bond purchases as slowing inflation remains a concern.

“It’s not about whether the Fed will taper; It is about when and how much and that’s what the market will be analyzing,” said Tom Tucci, managing director and head of Treasury trading in New York at CIBC World Markets Corp. “We’ll have a bit of a price discovery as we go into supply.”

The benchmark 10-year yield was little changed at 2.18 percent at 8:31 a.m. New York time, according to Bloomberg Bond Trader prices, after falling to 2.15 percent earlier. The price of the 1.75 percent note maturing in May 2023 was at 96 6/32.

U.S. government securities yield about 22 basis points less than bonds in an index of Canadian, European and Pacific Rim debt, according to Bloomberg World Bond Indexes. The spread is the narrowest since February 2011 as investors demand more to own U.S. bonds instead of their global peers.

The six-week decline is the longest run of losses since May 2009. The Fed will reduce its bond purchases to $65 billion a month at its Oct. 29-30 meeting, according to the median estimate in a Bloomberg survey of economists. The central bank currently buys $85 billion of Treasuries and mortgage securities each month to put downward pressure on borrowing costs.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell