Treasuries surged, pushing 10-year futures contracts to the biggest gain in 15 months, after Federal Reserve Chairman Ben S. Bernanke indicated the central bank will maintain its efforts to keep borrowing costs low.
“Highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy,” Bernanke said yesterday. Benchmark 10-year yields rose to the highest level in almost two years earlier this week on speculation the Fed will scale back the bond-buying program it uses to support the economy. Minutes of the policy makers’ June meeting issued yesterday showed they debated whether to reduce the purchases. The U.S. is due to sell $13 billion of 30-year bonds today.
Ten-year futures contracts for September delivery rose 29/32, or $9.06 per $1,000 face amount, to 126 6/32 as of 10:09 a.m. in Tokyo, according to data compiled by Bloomberg. It’s set for the biggest daily gain since April 6, 2012.
Benchmark 10-year yields declined four basis points, or 0.04 percentage point, to 2.58 percent, Bloomberg Bond Trader data showed. The price of the 1.75 percent note due in May 2023 rose 12/32 to 92 26/32. The yield climbed to 2.75 percent earlier this week, the most since August 2011.
Bernanke told reporters on June 19 that the Fed may begin to slow its $85 billion in monthly bond purchases this year and end them in 2014.
Japan’s 10-year yield slid two basis points to 0.835 percent, poised to decline for a third day.
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