市場預期明日數據不錯，債市overbought, 股市看牛 （8-16）

Treasuries Decline as Reports May Show Housing, Industrial Output Improve

By Wes Goodman - Aug 17, 2010

Treasuries fell, pushing 10-year yields up from a 17-month low, before government and central bank reports that economists said will show housing and industrial production improved.

Longer-maturity bonds led the decline on speculation separate figures will show producer prices rose last month, easing concern the U.S. is heading for deflation. The Federal Reserve is scheduled to buy Treasuries due from August 2014 to July 2016 today, reviving its purchases to spur the slowing U.S. economy by keeping borrowing costs down.

“Bonds will struggle” in the coming years, said Robert C. Doll, vice chairman at BlackRock Inc. in New York, which oversees $3.15 trillion. “Risk assets, especially stocks, will do just fine.”

The yield on the benchmark 10-year note rose three basis points to 2.60 percent at 1:17 p.m. in Tokyo, according to data compiled by Bloomberg. The 2.625 security due in August 2020 dropped 1/4, or $2.50 per $1,000 face amount, to 100 1/4. The rate slid to 2.56 percent yesterday, the lowest since March 2009.

Two-year notes yielded 0.50 percent, after falling to a record 0.48 percent earlier today.

Housing starts rose 2 percent in July from June, according to the median forecast in a Bloomberg News survey of economists before the Commerce Department reports the figure. Industrial production gained 0.5 percent, a separate survey showed before the Federal Reserve releases the data. The Labor Department will say producer prices climbed 0.2 percent last month, according to the surveys.

Bonds ‘Ahead of Themselves’

Treasuries have returned 8.2 percent this year, according to indexes compiled by Bank of America Merrill Lynch, as investors sought the relative safety of debt while equities tumbled. MSCI’s World Index of shares has fallen 3.6 percent in 2010, including reinvested dividends.

“The bond market is expecting very low growth,” Doll said in an interview yesterday in the U.S. Bonds are “probably a little ahead of themselves.”

The Fed plans to buy about $18 billion of Treasury securities and inflation-protected debt by the middle of September, according to its website. The next purchases will be on Aug. 19.

The central bank bought $300 billion of Treasuries last year “to help improve conditions in private credit markets,” according to a statement on March 18, 2009.

Ten-year yields will advance to 3.17 percent by year-end, and two-year rates will climb to 0.85 percent, according to a Bloomberg survey of banks and securities companies. The most recent forecasts were given the heaviest weightings.

‘Big Risk’

“Buying now is a big risk,” said Hiroki Shimazu, an economist in Tokyo at Nikko Cordial Securities Inc., a unit of Japan’s third-largest publicly traded bank. “I don’t recommend it. The economy is stable.”

Ten-year yields will rise to 3.5 percent by year-end, he said.

The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices, has narrowed to 1.63 percentage points from this year’s high of 2.49 percentage points in January. The 10- year average is 2.07 percentage points.

China cut its holdings of Treasury notes and bonds by the most ever, raising speculation government securities have become too expensive for some investors.

The nation’s holdings of long-term Treasuries fell in June for the first time in 15 months, dropping by $21.2 billion to $839.7 billion, a U.S. government report showed yesterday.

“This may have been opportunistic,” said James Caron, head of U.S. interest-rate strategy at Morgan Stanley in New York, one of 18 primary dealers that trade with the Federal Reserve. “Look at the level of yields. If you’ve held a lot of Treasuries, you’ve done well.”

To contact the reporter on this story: Wes Goodman in Singapore at [e-mail]