Sales of corporate bonds in the U.S. are surging toward the busiest May ever as borrowers race to the market before demand dries up with Bill Gross and Warren Buffett cautioning against buying debt at all-time low yields.
The longest decline in Treasuries this year has left U.S. government debt the cheapest since March 2011 when measured by real yields and the best relative value compared with German bunds in more than two decades.
Federal Reserve Bank of San Francisco President John Williams said quickening economic growth and gains in the job market may prompt the Fed in the next few months to start reducing its $85 billion in monthly bond-buying.
U.S. stocks fell, pulling benchmark indexes down from records, and the Dollar Index reversed losses as Federal Reserve officials discussed scaling back stimulus efforts. Gold futures extended the longest slump since 2011.
Federal Reserve Bank of Richmond President Jeffrey Lacker said additional stimulus won’t necessarily spur economic growth while increasing the challenges for the Fed when it begins to withdraw the record accommodation.
Federal Reserve Bank of Richmond President Jeffrey Lacker said broker-dealer units of banks should have higher capital requirements than deposit-funded subsidiaries because the financial crisis demonstrated the risks that stem from a reliance on markets for financing.