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Anybody notice what happened to the yield curve today? The Fed's new
hawkish tone is being blamed, but surely they cannot be happy that the curve is flattening, when the banking system desperately needs the opposite?
hawkish tone is being blamed, but surely they cannot be happy that the curve is flattening, when the banking system desperately needs the opposite?
Two-Year U.S. Notes Drop Most Since 1996 on Fed Rate Outlook
By Sandra Hernandez and Anchalee Worrachate
June 9 (Bloomberg) -- Treasuries fell, pushing yields on two-year notes up the most in 12 years, on growing speculation policy makers in the U.S. and Europe will raise borrowing costs this year to damp accelerating inflation.
Two-year notes, which are more sensitive to changes in the central bank's interest-rate policy, tumbled after New York Federal Reserve President Timothy F. Geithner said following a speech in New York today ``tighter monetary policy'' may be needed globally. U.K. debt dropped the most in a decade after a report showed U.K. producer-price inflation accelerated to the fastest pace in two decades.
``People are waking up to a more hawkish rhetoric from the Fed,'' said Dominic Konstam, head of interest-rate strategy at Credit Suisse Securities USA LLC, one of the 20 primary dealers that trade with the U.S. central bank. ``It's mainly thinking about the central banks shifting gears a little bit, being much more hawkish on inflation.''
Two-year yields rose 33 basis points, or 0.33 percentage point, to 2.71 percent at 4:45 p.m. in New York, according to BG Cantor Market Data. The 2.625 percent security maturing in May 2010 fell 5/82, or $6.25 per $1,000 face amount, to 99 27/32. Ten-year yields rose 8 basis points to 3.99 percent.
Yields on two-year notes touched 2.74 percent, the biggest one-day increase since March 1996, when they rose 36 basis points as faster-than-expected job growth dimmed prospects for the Fed to keep lowering interest rates.
Two-year yields rose to within 128 basis points of 10-year yields, the smallest gap since Jan. 17. The spread reached a 4 1/2 year high of 207 basis points on March 6...
http://www.bloomberg.com/apps/news?p...d=aO_bYaINcVAI
By Sandra Hernandez and Anchalee Worrachate
June 9 (Bloomberg) -- Treasuries fell, pushing yields on two-year notes up the most in 12 years, on growing speculation policy makers in the U.S. and Europe will raise borrowing costs this year to damp accelerating inflation.
Two-year notes, which are more sensitive to changes in the central bank's interest-rate policy, tumbled after New York Federal Reserve President Timothy F. Geithner said following a speech in New York today ``tighter monetary policy'' may be needed globally. U.K. debt dropped the most in a decade after a report showed U.K. producer-price inflation accelerated to the fastest pace in two decades.
``People are waking up to a more hawkish rhetoric from the Fed,'' said Dominic Konstam, head of interest-rate strategy at Credit Suisse Securities USA LLC, one of the 20 primary dealers that trade with the U.S. central bank. ``It's mainly thinking about the central banks shifting gears a little bit, being much more hawkish on inflation.''
Two-year yields rose 33 basis points, or 0.33 percentage point, to 2.71 percent at 4:45 p.m. in New York, according to BG Cantor Market Data. The 2.625 percent security maturing in May 2010 fell 5/82, or $6.25 per $1,000 face amount, to 99 27/32. Ten-year yields rose 8 basis points to 3.99 percent.
Yields on two-year notes touched 2.74 percent, the biggest one-day increase since March 1996, when they rose 36 basis points as faster-than-expected job growth dimmed prospects for the Fed to keep lowering interest rates.
Two-year yields rose to within 128 basis points of 10-year yields, the smallest gap since Jan. 17. The spread reached a 4 1/2 year high of 207 basis points on March 6...
http://www.bloomberg.com/apps/news?p...d=aO_bYaINcVAI
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