Treasury two-year notes rose, pushing yields down from almost the highest level in six months, after Federal Reserve Chair Janet Yellen said “considerable slack” in labor markets showed that the central bank’s accommodative policies will be needed for “some time.”
Treasuries fell for the first time in three days and stocks gained after a rise in consumer spending boosted speculation that economic growth would be fast enough to allow the Federal Reserve to keep reducing stimulus.
Treasury 30-year bonds fell, widening the gap between yields on the securities and five-year notes from the least since 2009, as investors embraced a strengthening economy amid Federal Reserve stimulus withdrawal.
Overseas creditors such as China and Japan enabled the U.S. to spend its way out of the recession as they gobbled up 80 percent of the nation’s Treasuries. Now, their holdings are dropping toward the lowest level in a decade, while homegrown investors have picked up the slack.
Beijing’s usually clotted skies were relatively clear for a few days, a welcome improvement that some residents of the Chinese capital generously attributed to the presence of American First Lady Michelle Obama.