US Treasuries move up as Japanese stocks pare gains
Fed prepares to buy government debt
New York : Treasuries rose as Japanese stocks pared gains and the Federal Reserve prepared to buy government debt yesterday, reviving demand for fixed-income securities.
Longer-maturity bonds led the advance after New York University Professor Nouriel Roubini said the Obama administration's latest stimulus proposals won't help the US economy. The Fed will buy debt maturing in 2013 and 2014 as part of its plans to purchase $18 billion (Dh66.06 billion) of securities by the middle of September to keep borrowing costs low.
"It is still far from clear about how severe an economic slowdown will be, even as concerns over a double-dip recession have eased," said Tomohisa Fujiki, an interest-rate strategist in Tokyo at BNP Paribas SA., one of the 18 primary dealers required to bid at Treasury debt sales. "There is no strong reason to sell bonds right now."
The yield on the 10-year note fell two basis points to 2.64 per cent as of 12.38 pm in Tokyo, according to data compiled by Bloomberg. The 2.625 per cent security due August 2020 gained 1/8, or $1.25 per $1,000 face amount, to 99 27/32.
The Nikkei 225 Stock Average trimmed gains to 0.7 per cent after earlier rising as much as 1.2 per cent.
Treasuries have returned 8 per cent this year after losing 3.7 per cent in 2009, according to Bank of America Merrill Lynch indexes, as investors sought safer assets.
Treasuries also gained as the Bank of Korea unexpectedly left its benchmark interest rate unchanged, signalling concern that slowing external demand will hurt exports in Asia's fourth- biggest economy.
