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 rallied, sending 30-year bond yields to a 10-month low, as mixed economic signals bolstered haven demand before a jobs report tomorrow. U.S. stocks were little changed after a three-day rally.
A drop in the price of lumber may signal the yields on the 10-year Treasury note will fall as the Federal Reserve ends its $600 billion Treasury-purchase program in June, according to Nomura Holdings Inc.
Treasuries rose, pushing 10-year note yields to the lowest in three months, after a private report showed U.S. manufacturing slowed more than forecast in January, adding to questions about the strength of the economic recovery.
Treasuries were set for the biggest weekly decline since April before a government report that economists say will show the U.S. is adding enough jobs to allow the Federal Reserve to keep reducing bond purchases.
Nomura Holdings Inc. advised betting that U.S. two-year interest-rate swap spreads will widen on renewed concern Europe’s sovereign debt crisis will increase demand for dollar-denominated funding in the region.