U.S. 10-Year Treasuries Fall in Asia After Fed's Parry Says Rates May Rise
bloomberg.com
The benchmark 10-year note fell for the sixth day in seven in New York on investor concerns that higher rates would make yields on existing securities less attractive. The central bank's benchmark interest rate is 1 percent. Inflation erodes the value of fixed-income payments.
``The seeds of inflation have been sown and now it's just a matter of time before rates start moving up,'' said Gregory Hahn, chief investment officer at 40/86 Advisors Inc., with $26 billion in fixed-income assets under management, in Carmel, Indiana.
The consumer price index, minus food and energy, rose 0.2 percent in March from the month before, according to the median estimate of 61 analysts surveyed by Bloomberg News. The Labor Department will release the report on Wednesday. The index is on track to rise 0.6 percent in the first three months of this year, compared with 0.7 percent for the second half of 2003.
``The decline from the March highs'' in Treasury prices ``started after two stronger-than-expected core CPI numbers,'' said Mark Mahoney, head of interest-rate strategy at UBS Securities LLC in Stamford, Connecticut. ``It's obviously very important to the market.''
The gain of 308,000 U.S. jobs in March is no reason to move up forecasts for a Fed rate increase, according to most of Wall Street's largest bond dealers. Of the primary dealers surveyed by Bloomberg News last week, 12 predicted the Fed will boost rates this year, the same as in a March 15 survey.
``The Fed will only act when it sees a clear improvement in the labor market,'' said Hiroki Itoh, who helps manage the equivalent of $1.5 billion of bonds and equities at Cigna International Investment Advisors Co. in Tokyo. ``One or two months of strong data is not enough of a reason to make any changes.''
The Fed will probably hold its target for overnight bank lending at 1 percent until the fourth quarter or early next year, Itoh said.
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Certainly lots of conflicting views
Mish |
