Treasuries Drop for Second Day on Appetite for Riskier AssetsSusanne Walker
Treasuries fell for a second day, pushing yields up from almost 20-month lows, as investors’ appetite for risk improved and stocks extended gains.
Benchmark 10-year note yields climbed from daily lows reached after European Central Bank President Mario Draghi committed to buying up to $1.3 trillion of bonds, including government debt, to revive economic growth and ward off deflation.
“The perception in the equity space is it’s good for risk,” said George Goncalves, head of interest-rate strategy at Nomura Holdings Inc., one of 22 primary dealers that trade with the Federal Reserve. “Investors are trying to come to terms with the size of the program versus will it work. The stock market is indeed believing it’s a reflation trade.”
Ten-year yields rose two basis points, or 0.02 percentage point, to 1.9 percent at 2:57 p.m. New York time. The 2.25 percent note due in November 2024 dropped 1/4, or $2.50 per $1,000 face amount, to 103 1/8. The yield declined as much as six basis points earlier.
The Standard & Poor’s 500 Index of stocks gained 1.6 percent.
U.S. 30-year bond yields fell one basis point to 2.45 percent. They reached a record 2.35 yesterday as tumbling oil prices and global economic headwinds fueled speculation the Fed will take a cautious approach to raising interest rates later this year.
The chance of a Fed interest-rate increase by its October meeting was at 53 percent, futures data show. The central bank has kept its target for the federal funds rate at virtually zero since 2008 to support an economic recovery.