This guy is DUMBER than Paul O'Neill....
US Treasury's Snow hopes 20-yr TIPS well received
Fri January 23, 2004 01:31 PM ET
NEW YORK, Jan 23 (Reuters) - U.S. Treasury Secretary John Snow on Friday said he hoped a proposal to issue new 20-year inflation indexed notes (TIPS) would be welcomed by the bond market.
Earlier on Friday the U.S. Treasury Department said it wanted feedback from major Treasury securities dealers on the idea of increasing issuance of 20-year inflation-indexed debt in place of conventional securities.
Asked about the proposal on Bloomberg Radio, Snow said: "It will be one of our products in the market and I hope it gets a good reception."
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NEW YORK, Jan 23 (Reuters) - U.S. swap spreads pushed wider
on Friday after speculators failed to spur mortgage hedging,
while the dollar's gains raised worries about foreign central
banks slowing or stopping their purchases of Treasuries.
Initially speculators were gunning to push the 10-year
Treasury yield through the bottom end of its range around 3.92
percent, hoping that mortgage portfolios would then snap up
Treasuries or pay fixed-rates in swaps to hedge against lower
rates, traders said.
When the 10-year yield fell as low as 3.91 percent but
mortgage hedgers failed to show up en masse, the market quickly
reversed course. "Once you fail to get through and stay
through, the backlash is very fast," one swaps trader said.
But adding to the losses was a Reuters report of an unnamed
European official saying the European Central Bank could cut
rates after the coming G7 meeting to take pressure on the euro.
That sparked a sharp rise in the dollar and talk that foreign
central banks, particularly in Asia, would no longer be big
buyers and help keep rates low.
**Treasury Secretary John Snow's mention of a possible
20-year inflation-indexed security, a longer maturity many in
the market thought the Treasury was not considering, also
spurred losses in 30-year bonds.**
Swaps traders said spreads held their ground at first but
gradually gave way with the sharp 13-basis-point jump in the
10-year Treasury yield, which takes pressure off mortgage
hedgers eyeing a further fall in rates.
The five-year spread widened half a basis point to 36-3/4
basis points but was unchanged on the week. The 10-year spread
popped a basis point wider to 37-1/4 basis points, but that is
out only slightly from 37 basis points a week ago.
The jump in-five and 10-year rates caused a steepening of
the swaps curve. The difference between two- and 10-year swap
rates rose to 243 basis points from 238 basis points. But the
10-year yield remains broadly within a big range between 4.60
percent and 3.90 percent during the past 6-1/2 months.
The big focus now turns to the Federal Reserve and its
two-day policy meeting culminating on Wednesday. Few expect
major changes in the Fed's policy statement, as central bankers
have taken pains to emphasize that low inflation means its
target rate can stay low for several months.
If the Fed drops its words that policy can remain
accommodative for a "considerable period," which almost no
analysts expect, interest-rates would rise sharply and swap
spreads would widen.
---------------------SWAP SPREADS----------------------
Jan 23 Jan 22 Jan 21 Jan 20 Jan 16 Jan 15
2-YR 34-3/4 34-3/4 35-1/2 35-3/4 34-1/2 34-1/4
5-YR 36-3/4 36-1/4 36-1/4 36-1/2 36-1/2 36-3/4
10-YR 37-1/4 36-1/4 36-1/2 36-3/4 36-3/4 37-00
30-YR 31-00 30-1/2 30-1/4 30-1/4 30-00 30-1/4
-------------------------------------------------------
----------------------SWAP CURVE-----------------------
Jan 23 Jan 22 Jan 21 Jan 20 Jan 16 Jan 15
2-10 243 238 237 238 240 238
2-5 142 135 135 137 139 139
5-10 101 103 102 102 101 100
-------------------------------------------------------
(all data are based on Reuters sources and are expressed in
basis points) |
