U.S. Bond Market Early Close Recommended by SIFMA on Sandy

The Securities Industry and Financial Markets Association suggested that trading end at noon New York time in dollar-denominated fixed-income securities in the U.S. because of Hurricane Sandy.

The recommendation by Sifma applies to trading of government securities, mortgage- and asset-backed debt, over- the-counter investment grade and high-yield corporate bonds, municipal bonds and secondary money market trading in bankers’ acceptances, commercial paper and Yankee and Euro certificates of deposit, the New York-based trade group said in a statement posted on its website. The early close will not affect the closing time for settlements.

The U.S. Treasury is scheduled to sell $32 billion of three-month bills and $28 billion of six-month bills at 11:30 a.m. New York time. Due to “the weather forecast for the coming days” the Treasury moved to today a four-week bill auction that was originally scheduled for tomorrow, according to a Treasury department statement on Twitter. The four-week bill auction will close at 10:30 a.m. New York time.

The Chicago-based CME Group, the world’s largest futures exchange, will close at 11:a.m. central time its interest-rate complex of contracts, including Treasury, Eurodollar and fed funds futures and options on both the trading floor as well as on Globex, its electronic platform, according to a statement. The Federal Reserve is scheduled to sell $7 billion to $8 billion of Treasuries maturing from November 2015 through December 2015 at 11 a.m. The sales are part of the Fed’s program to replace short-term debt in its portfolio with longer-term Treasuries in an effort to keep borrowing costs low.

Storm Watch

Fed funds, the U.S. overnight inter-bank lending rate, opened today at 0.17 percent, within the Federal Reserve’s target of zero to 0.25 percent, after closing at 0.15 percent on Oct. 26, according to ICAP Plc, the world’s largest inter-dealer broker.

SIFMA will continue to monitor conditions to determine any additional recommendations for tomorrow, according to the statement.

Hurricane Sandy is barreling toward New York City with 70- mile-per-hour winds and the threat of an 11-foot sea surge. The storm is expected to come ashore late today in southern New Jersey and potentially affect 60 million people.

The U.S. securities industry canceled equity trading on all markets today. The shutdown, announced by the Securities and Exchange Commission, may extend through tomorrow and followed an earlier decision by the New York Stock Exchange to close floor trading.

Exchanges from the NYSE and Nasdaq Stock Market to those run by Direct Edge Holdings LLC in Jersey City, New Jersey, and Bats Global Markets Inc. in Lenexa, Kansas, will suspend operations. U.S. equity trading is spread across 13 exchanges and dozens of private venues run by brokerages.

To contact the reporter on this story: Liz Capo McCormick in New York at emccormick7@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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