Treasuries Gain Most in a Week as Traders Cut Bets on Inflation
June 23, 2011, 2:39 AM EDT
By Wes "Wesley" Goodman
June 23 (Bloomberg) -- Treasury 30-year bonds rose the most in a week on speculation the end of the Federal Reserve’s $600 billion debt-purchase program this month will depress commodity prices and slow inflation..../
“Inflation expectations are coming down, and that will put downward pressure on yields,” said Yoshiyuki Suzuki, Tokyo- based head of fixed income at Fukoku Mutual Life Insurance Co., which has the equivalent of $69.6 billion in assets. “Commodity prices have peaked with the end of QE2.” Fukoku bought Treasuries a few weeks ago, Suzuki said.
The U.S. plans to sell $7 billion of 30-year TIPS today. The previous auction of the securities in February drew a 2.19 percent yield, and the rate has dropped to 1.81 percent.
Japanese 10-year bonds yields dropped 1.5 basis points to 1.105 percent, matching the least since November. The Ministry of Finance sold 2.425 trillion yen ($30.5 billion) of two-year notes today at an average yield of 0.152 percent, the lowest level at the monthly auctions since October.
Stay long on your bond funds muchachos! Deflation cometh...................... *
Edited by Realistbear, 23 June 2011 - 08:13 AM.