Treasuries fall for the third week in a row

Friday, 8 April 2011 10:47

For the third week in a row, treasuries fell.  This is due to the expectations that the FED will raise interest rates by year end to control inflation. 

Yields on 10-year notes and Treasury Inflation Protected Securities, widened to 2.61 percentage points this was the highest spread in almost 3 years. Futures show the chances of a rate increase this year to be around 36%, even higher probably for the first quarter 2012 at around 70%.

Ten-year rates rose in early Toyko trading. The 3.625 percent note maturing in February 2021 declined 6/32, or $1.88 per $1,000 face amount, to 100 14/32. The yield has advanced 29 basis points in three weeks.

Treasury notes due in seven years and less rose for the first time in three days yesterday as a partial government shutdown loomed and as the supply of the shortest-term U.S. government securities dwindles.

Investors bought notes after rates on six-month bills fell to a record low this week with the Treasury reducing issuance to avoid exceeding a federal debt limit. Lawmakers are seeking to reach a compromise on the budget and avert a shutdown.