US Treasuries Little Changed as Dudley Predicts Fast Growth

Treasuries were little changed after Federal Reserve Bank of New York President William C. Dudley said economic growth will probably quicken in 2014, possibly warranting a reduction in the central bank’s bond purchases.

The benchmark 10-year note yield traded in the narrowest range in two months as Dudley, in remarks prepared for a speech in Stamford, Connecticut, reiterated that the Fed will probably prolong bond purchases if the economy turns out weaker than its forecasts. Investors trimmed wagers the prices of Treasuries will drop, according to a survey by JPMorgan Chase & Co. A Labor Department report July 5 is forecast to show the U.S. added 165,000 jobs.

“All eyes are on Friday’s employment report — the Fed has continued to reiterate the importance of the labor market,” said Ian Lyngen, a government-bond strategist at CRT Capital Group LLC in Stamford, Connecticut. “Removing or tapering quantitative easing is not the same as hiking, and an increase in the target Fed funds rate is a 2015 or 2016 event.”

The benchmark 10-year yield was little changed at 2.48 percent at 12:56 p.m. New York time after touching 2.45 percent, according to Bloomberg Bond Trader prices. The 1.75 percent note maturing in May 2023 traded at 93 21/32. The yield dropped to 2.44 percent on June 28, the lowest level since June 21.

The Treasury 10-year yield traded in a 4.47 basis-point range today, the narrowest since May 9. Even after recent increases, the yield is more than a percentage point below its decade average of 3.56 percent.

The Securities Industry and Financial Markets Association recommends an early close at 2 p.m. New York time tomorrow before the observance of the July 4 holiday in the U.S.


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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