Mortgage Bond Yields Drop as Fed Extends Aid: Copenhagen MoverFrances Schwartzkopff
Yields in the Danish mortgage bond market, the world’s third-largest, dropped in Copenhagen trading after the U.S. Federal Reserve said it will keep buying bonds to support the economy.
The yield on Nykredit A/S’s 2 percent bullet bond maturing October 2015 declined to 0.62 percent, the lowest since July 22. The yield on Realkredit Danmark A/S’s 3.5 percent callable bond maturing October 2044 dropped to 3.76 percent, its lowest since Aug. 27.
The U.S.’s policy-setting Federal Open Market Committee refrained yesterday from slowing the $85 billion pace of its monthly securities buying. Federal Reserve Chairman Ben S. Bernanke said he must do “what’s needed for the economy,” as economists at the Washington-based Fed cut their 2013 and 2014 growth estimates.
“The announcement is surprising because Bernanke in June said he planned to gradually reduce before the end of the year,” Lise Bergmann, a housing economist at Nykredit, said in a note. That’s pushing yields down, she said.
Fed economists predicted yesterday U.S. gross domestic product will expand by 2 percent to 2.3 percent this year, down from a June estimate of 2.3 percent to 2.6 percent. The Danish central bank also lowered yesterday its growth forecasts. The economy will expand by 0.3 percent this year, compared with a June forecast of 0.5 percent, it said.