Treasuries fell, pushing 10-year note yields above 2 percent for the first time since March, after Federal Reserve Chairman Ben S. Bernanke told Congress the Fed may cut the pace of bond purchases at the next few meetings if policy makers see indications of sustained economic growth.
Treasuries rose for the first time in three days as comments from Federal Reserve officials added to speculation Chairman Ben S. Bernanke will emphasize the need to sustain stimulus when he speaks before Congress tomorrow.
The Standard & Poor’s 500 Index returned to a record as a Federal Reserve official said bond purchases should continue and Goldman Sachs Group Inc. forecast the stock rally will last at least through 2015. Treasuries rose and the yen pared earlier losses while grains and gold fell.
The gap in yields between benchmark Treasuries and company debt leaves room for investors to earn returns in fixed income, according to David Leduc, chief investment officer at Standish Mellon Asset Management Co.
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.
Treasuries snapped their longest losing streak in two months on speculation the economy may be slowing after reports showed manufacturing in the New York region shrank this month and producer prices dropped the most in three years in April.
Treasury 10-year note yields reached two-month highs as speculation the Federal Reserve may consider tapering its record bond-purchase program crimped demand for the securities as equities indexes traded at record levels.
Treasury 10-year yields reached the highest level in almost seven weeks after a report showed U.S. retail sales unexpectedly increased in April, renewing optimism central-bank efforts to spur economic growth are working.