U.S. government debt prices gained on Tuesday with 30-year bonds leading the rally, as investors bet that the European Central Bank will launch new quantitative easing this week, keeping longer-dated debt in demand as investors hunt for higher yields.
The ECB meeting on Thursday is this week’s main focus, when many expect the central bank will announce purchases of government bonds in a bid to fight off deflation and kickstart growth.
“If you are looking for ECB to not disappoint on Thursday, the predominant view is that you still won’t have enough long-dated assets, and I think that is driving the flattener today,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.
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