The extra yield Treasury 30-year bonds offer over five-year notes shrank for an eighth week, the longest run in 22 years, as the outlook for slow inflation fuels demand for the longest maturities.
The spread narrowed to 120 basis points, extending its push to the lowest in almost six years. Yields on shorter-term debt have climbed this year as traders prepared for the Federal Reserve to raise interest rates in 2015 as the economy grows. Data today will show producer prices fell while consumer confidence rose, Bloomberg News surveys of economists show.
“The Fed is going to raise rates,” said Kazuaki Oh’e, a debt salesman at CIBC World Markets Japan Inc. in Tokyo. “Short-term rates are going to reflect that. Because inflation is so low, long-term bond yields are going to stay at a lower level.”