minor metal momo due at least in part to this:
Treasury Plans Record $230 Billion Borrowing
quote.bloomberg.com
U.S. Treasuries fell in New York, pushing 10-year note yields to the highest since December, as the government said it would borrow a record $230 billion in the third and fourth quarters to finance a growing budget deficit.
Traders pushed 10-year notes down for a third day, with the securities coming off of their biggest two-week decline since November 2001, amid signs the economy is strengthening. The gap between two- and 10-year Treasury yields expanded to the widest since at least 1977 as traders said low interest rates would lead to a recovery, as well as faster inflation.
``A lot of people are bleeding because of the backup in Treasury rates we've seen in recent weeks,'' said Sadakichi Robbins, head of fixed-income trading at Bank Julius Baer & Co. in New York, which manages $76 billion. ``Because of that, they're not going to be very aggressive'' buyers when it comes time for the government to sell new securities next month.
The 3 5/8 percent note due in May 2013 lost 7/8, or $8.75 per $1,000 face amount, to 94 23/32 at 3:45 p.m. in New York, according to Bear Stearns. Its yield rose 12 basis points to 4.29 percent. The 1 1/2 percent note due in 2005 fell more than 1/8 to 99 13/16, lifting its yield 10 basis points to 1.60 percent. A basis point is 0.01 percentage point.
The gap between two- and 10-year Treasury yields expanded to as much as 2.70 percentage points. As recently as May 23, the gap was as narrow as 1.99 percentage points.
Deficit Financing
The government said it would borrow a net $104 billion in the July-to-September period and $126 billion in the subsequent three months. The $104 billion is less than the median $130 billion forecast of 15 bond trading firms surveyed by Bloomberg News, but still a record for the third quarter. The $126 billion is the highest ever for any quarter, topping the $111 billion borrowed in the first quarter.
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