Treasuries are poised to fall this month, marking their first July loss in eight years, on speculation the world’s biggest economy will avoid a mid-year lull and the Federal Reserve will curb bond purchases.
The CHART OF THE DAY shows U.S. government securities with maturities of more than one year have lost 0.3 percent since June 30 after rising in July every year since 2006. The only month with a longer stretch of gains this century is August, when Treasuries rallied from 2000 through 2011, data compiled by Bloomberg show. Green blocks on the chart indicate when prices rose and red squares when they fell.
Economists are forecasting employment growth is fast enough now for the Fed to scale back the $85 billion a month bond-buying program it uses to support the economy. Summer slowdowns brought jobs gains last year down to 87,000 in June from 311,000 in January. In 2011, the figure slid to 78,000 in July from 304,000 in April.
“This year is different from earlier years,” said Bin Gao, an interest-rate strategist in Hong Kong at Bank of America Corp., one of the 21 primary dealers that trade directly with the Fed. “This is the first year when we have the threat of Fed tapering. In the earlier years, the risk was of more Fed buying. There’s a big distinction between these two eras.”
A Labor Department report Aug. 2 will probably show the U.S. added 185,000 jobs in July, according to a survey of economists by Bloomberg News. Employment growth has averaged 201,000 in 2013, versus 179,000 across the prior two years.
Fed Chairman Ben S. Bernanke and his fellow policy makers meet today and tomorrow to discuss their program of bond buying. They will start trimming purchases in September, according to half of the economists surveyed by Bloomberg News July 18 to July 22.