The world’s top-performing inflation-linked bonds suggest the Bank of Canada is winning a battle against disinflation after the consumer price index surged above its target for the first time in two years.
The Federal Reserve is likely to announce next week a round of asset purchases focused on mortgages to bolster President Barack Obama’s efforts to help debt-strapped homeowners refinance, Toronto-Dominion Bank’s Richard Gilhooly said.
Some of the job-market indicators watched by Federal Reserve Chair Janet Yellen are still flashing red even after today’s report showing the unemployment rate dropped to the lowest level in more than five years.
Treasuries rose for the first time in three days as U.S. retail sales unexpectedly fell in January by the most since June 2012 and initial claims for jobless benefits rose more than forecast last week.
Investors bypassing the Federal Reserve’s network of primary dealers won record amounts of securities at the $109 billion in U.S. Treasury auctions this week, underscoring the appeal of the world’s safest securities.
Treasuries rose the most in almost two weeks, pushing the 10-year note yield further below the level when the Federal Reserve voted last month to taper its bond purchases, as reports showed an uneven economic expansion.
The dollar declined from a one-week high as speculation the Federal Reserve will begin reducing its stimulus measures as soon as next month weighed on demand for assets denominated in the U.S. currency.
Treasuries fell, pushing 30-year bond yields to almost a two-year high, after reports showing stronger-than-forecast economic growth and jobs bolstered speculation the Federal Reserve may reduce its bond-buying.