The supply of bonds worldwide will fall $460 billion short of demand this year, underpinning support that confounded forecasters and sent the fixed-income market to its best start to a year since 2003.
The Treasury market yield curve steepened after Federal Reserve Chair Janet Yellen said a “high degree” of accommodation remains warranted, tempering expectations for an acceleration of interest-rate increases.
Treasuries rose a second day as demand at the government’s auction of $30 billion in three-year notes was bolstered by the highest yields in six months and investors seeking a haven in the world’s most liquid assets.
Treasuries are losing money for the first time since December as investors demand higher yields with the Federal Reserve signaling that a strengthening economy may prompt policy makers to raise rates sooner than forecast.
Treasuries fell, pushing yields on 10-year notes up the most since September, after stronger-than- forecast job gains suggested the economy is poised to accelerate after being hampered by severe winter weather.
U.S. stocks fell with Treasuries while the dollar gained as Federal Reserve meeting minutes indicated stimulus cuts would likely continue in measured steps and the International Monetary Fund warned of risks to global growth. Ukraine’s bonds tumbled while U.S. natural gas jumped.
Treasury 10-year note yields rose from the lowest level in more than a week as minutes of the Federal Reserve’s last meeting signaled little likelihood of a pause in the central bank’s reduction of bond purchases.