The U.S. Treasury Department said it plans to sell a floating-rate security as early as the fourth quarter this year and signaled it may decide to “gradually” reduce the supply of notes and bonds at auction.
Treasury volatility dropped to a record low and prices were little changed for a third week, raising concern a rally is losing momentum as analysts forecast a report today will show economic growth picked up.
Wall Street’s biggest bond dealers see little chance the Federal Reserve will slow the pace of debt purchases designed to boost economic growth before the fourth quarter, even as policy makers face calls to curb the buying.
Japan’s biggest investors are shunning their government’s bonds in favor of U.S. Treasuries, endorsing the policies of Bank of Japan Governor Haruhiko Kuroda to spark inflation and aiding Federal Reserve Chairman Ben S. Bernanke’s efforts to spur U.S. economic growth.
International investors bought more Treasuries last quarter than any other start to a year since 2009, with holdings approaching $3 trillion, as a new crisis in Europe weighs on the euro and Japan debases the yen.
Inflation will stabilize without sliding into deflation after the Federal Reserve’s program to spur growth by purchasing $600 billion of Treasuries concludes tomorrow, according to Nomura Holdings Inc.’s George Goncalves.
Treasuries rose for a second day, with 10-year yields having the biggest weekly drop since August, as $85 billion of spending cuts that threatened to slow the world’s largest economy were set to be triggered.
The outstanding amount of zero- coupon U.S. Treasury notes and bonds rose in February by the most in more than two years as investors bet inflation will stay low even as the Federal Reserve continues monetary stimulus.