US Treasuries Continue Falling Before Jobs Report

Treasuries fell for a second day as a Labor Department report this week is forecast to show gains in employment and wages, and as companies including Inc. and American Express Co. prepare to sell debt.

Benchmark 10-year yields rose from almost a six-week low as the U.S. is forecast to have added more than 200,000 in November for the 10th consecutive month. The Bloomberg U.S. Treasury Bond Index (BUSY10) of debt due in a decade and more has returned 21 percent this year through yesterday.

“It’s all very supply oriented,” said Thomas di Galoma, head of fixed-income rates and credit at ED&F Man Capital Markets in New York. “Folks are getting a little leery of a stronger jobs report, and on the back of the jobs report you have Treasury supply next week.”

Benchmark Treasury 10-year note yields rose five basis points, or 0.05 percentage point, to 2.28 percent at 10:35 a.m. New York time, according to Bloomberg Bond Trader data. The 2.25 percent securities maturing in November 2024 traded at 99 23/32. The yield dropped yesterday to 2.15 percent, the lowest level since Oct. 21.

U.S. corporate bond sales swelled to an annual record as a late-year rush by borrowers to lock in low interest rates pushed offerings for 2014 pass $1.5 trillion. As companies sell debt, they enter into so-called rate-lock agreements, in which they bet on Treasury prices falling to guard against higher yields. Once the debt is sold, the wagers are ended.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza