U.S. Notes Decline; More Debt May Be Sold to Finance Terror War
Sept. 8 (Bloomberg) -- Treasuries fell in London trading after U.S. President George W. Bush sought $87 billion for military operations and reconstruction in Iraq and Afghanistan in the next fiscal year, raising investor concern the government will sell more bonds to finance the spending.
The planned outlay will add to a budget deficit that's already projected to reach $480 billion in the next fiscal year, after an estimated record $455 billion gap this year.
The benchmark 4 1/4 percent Treasury due in August 2013 fell 11/32, or $3.44 per $1,000 face amount, to 98 27/32 at 8:19 a.m. in London, according to Van Der Moolen NV. Its yield rose 4 basis points to 4.39 percent. A basis point is 0.01 percentage point.
``The supply concern was bad already, and that was underpinning the overall bearish trend in the Treasury market,'' said Edward Lee, a fixed-income strategist at Standard Chartered Plc in Singapore. The sell-off is likely to continue and yields may rise to 4.5 percent by the end of the month, Lee said.
Delaware Senator Joe Biden, the senior Democrat on the Senate Foreign Relations Committee, said on Cable News Network after the speech that ``we have no choice'' but to fund Bush's request. To pay for it, Biden suggested postponing some of $1.7 trillion in tax cuts that Congress enacted.
Congress approved a supplemental request in April that included $62.4 billion for troops and supplies. Bush spoke in a televised address, his first formal speech on Iraq since May 1, when he declared major combat operations over.
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