US bond yields spark concern

By Michael Mackenzie and Kiran Stacey in New York and David Oakley in London

Published: June 10 2009 20:23 | Last updated: June 11 2009 14:57

US long-term interest rates continued to test important levels on Thursday as investors worried about the level of national debt and whether the Federal Reserve might have to raise interest rates to combat inflation.
투자자들은 국가채무와 인플레이션 때문에 미국장기채권의 이자율을 걱정하고 있다.

The yield on the 10-year Treasury note, the benchmark rate for US mortgages, briefly traded above 4 per cent, only to attract buyers once more after weekly jobless claims and retail sales data were published in line with expectations.
10년물은 4% 이상으로 거래된다. 실업률과 소매판매율이 기대에 맞게 나왔다.

The 10-year note was recently trading at 3.97 per cent, up 3 basis points, having hit 4 per cent during Wednesday after an auction of $19bn in 10-year government debt came at higher than expected yields.
10년 국채는 3.97에 거래 되었다.

The next test of the US Treasury’s issuance programme looms later on Thursday with the sale of $11bn in 30-year bonds. An auction of 30-year bonds last month went badly as investors signalled their concerns about the budget deficit.

“That did not go well last time, so there is also some additional concern,” said Dominic Konstam, head of interest rate strategy at Credit Suisse.

The yield on the 30-year bond was up 6 basis points at 4.81 per cent early Thursday. Last week, the yield was trading below 4.50 per cent.

“Once the 30-year is out of the way, the market should have a window to rally,” said analysts at MF Global. “The bull story rests in higher mortgage rates slowing the recovery.”

On Thursday, the 30-year mortgage coupon rose to a peak of 5.12 per cent, having surged from 3.90 per cent over the past month. This week, the latest survey from the Mortgage Bankers Association showed that its mortgage refinancing application index fell 12 per cent to its lowest weekly level since mid-November. That was prior to the Federal Reserve’s announcement of its plan to buy mortgages.

Concerns about the growth of government borrowing on Wednesday forced the US Treasury to give investors in an auction of $19bn in 10-year notes a yield of 3.99 per cent – 4 basis points higher than the yield available before the auction. That constituted the biggest yield markup since a 10-year auction in May 2003, said Morgan Stanley.

Traders said the good news of the day was that buyers entered the market when yields reached 4 per cent. “There should be natural support for the 10-year note around 4 per cent,” said Mr Konstam.

“We are seeing traders draw a line in the sand at 4 per cent” on 10-year notes, said Tom di Galoma, head of US rates trading at Guggenheim Capital Markets.

In recent months, auctions have often been awarded at higher-than-expected yields, with dealers and investors being asked to buy higher amounts of debt as the US Treasury seeks to fund a growing budget deficit.

Copyright The Financial Times Limited 2009