October 23, 2013 / 1:01 PM / 4 years ago

TREASURIES-Yields lowest in three months as tapering seen delayed

* Ten-year yields lowest since July, fall to 2.50 pct
    * Fed seen reducing bond purchases in March
    * Fed to buy $2.75 bln-$3.50 bln in notes due 2020-2023

    By Karen Brettell
    NEW YORK, Oct 23 (Reuters) - U.S. Treasuries yields fell to
the lowest in three months on Wednesday, after weaker than
expected jobs data on Tuesday reinforced expectations that the
Federal Reserve is unlikely to reduce the size of its bond
purchase program in the near term.
    Buying overnight helped yields fall further, after a rally
on Tuesday and no large data releases scheduled on Wednesday.
The government is catching up on delayed economic data after the
government's 16-day partial shutdown was lifted a week ago.
    Market focus is now largely centered on next week's Federal
Reserve policy meeting, where the U.S. central bank is expected
to keep the size of its $85 billion a month bond purchase
program unchanged.
    "The Fed is kind of handcuffed from doing any tapering, the
consensus is pushing it out to March. The weak (jobs) number
supports it," said Sean Murphy, a Treasuries trader at Societe
Generale in New York.
    A Reuters polled conducted on Tuesday showed 9 of 15 U.S.
primary dealers see the Fed starting to reduce bond purchases in
March, with many of them blaming Washington's fiscal impasse for
a "significant" impact on the Fed's timing to pare stimulus.
 
    Data over the coming months is likely to be skewed by the
effects of the 16-day government shutdown, muddying insight into
the actual state of the economy.
    The release of the October payrolls report has been pushed
back to Nov. 8 from Nov. 1. Other key data that have been
delayed includes the Consumer Price Index for September, which
will now be released on Oct. 30, and the Producer Price Index
for September, now due on Oct. 29. 
 
    Benchmark 10-year notes were last up 3/32 in
price to yield 2.50 percent, the lowest since July 23 and down
from 2.60 before the jobs data was released on Tuesday. The
yields have fallen from 3.00 percent on Sept. 5, before the Fed
surprised investors by keeping the size of its bond purchase
program unchanged. 
    The Fed will buy between $2.75 billion and $3.50 billion in
notes due 2020 to 2023 on Wednesday as part of its ongoing
purchase program.

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