Global Bonds Drop, U.S. Yields Highest in 2-years

Treasuries slumped, pushing 10-year yields to the highest since 2011, as government bonds from Australia to Germany slid on expectation that a reduction in accommodation from the Federal Reserve will lead to an eventual end of record low central bank borrowing rates.

Benchmark yields extended gains after rising 40 basis points last week, the most in 10 years, after Fed Chairman Ben S. Bernanke said the central bank may begin tapering its quantitative-easing program this year and end it in mid-2014. Two-, five- and seven-year notes also declined before the Treasury auctions $99 billion of the securities this week.

“No one wants to buy, no one wants to get in front of a speeding train,” said Ira Jersey, an interest-rate strategist at Credit Suisse Group AG in New York, one of 21 primary dealers that trade with the central bank. “The Federal Reserve is probably going to have to be the impetus to stabilize this.”

The 10-year note yield rose nine basis points, or 0.09 percentage point, to 2.62 percent at 10:52 a.m. New York time, according to Bloomberg Bond Trader prices, after reaching 2.66 percent, a level unseen since August 2011. The 1.75 percent security due in May 2023 declined 22/32, or $6.88 per $1,000 face amount, to 92 1/2.

The two-year rate traded at 0.41 percent after reaching 0.42 percent, the most since July 28, 2011. The 30-year yield climbed as much as seven basis points to 3.65 percent, the highest since August 2011.


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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