Treasuries Rise as Mitsubishi UFJ Joins Dalio Calling for QE

Updated on
  • Shimomura says ``the game has shifted'' for the U.S. Fed
  • Bridgewater's Ray Dalio predicts ``major easing via QE''

The Fed used quantitative easing -- the process of buying bonds to flood the economy with money and put downward pressure on benchmark borrowing costs -- from 2008 through last year to support the U.S. economy.

Photographer: Brendan Smialowski/Bloomberg

Treasuries rose for the first time in three days on speculation a stock-market rout will lead the Federal Reserve to delay raising interest rates.
Mitsubishi UFJ Kokusai Asset Management joined Ray Dalio, the billionaire founder of Bridgewater Associates, in predicting the Fed will revive its bond-purchase program known as quantitative easing. As shares and commodities plunged in August, investors scaled back forecasts for a Fed rate increase, and the futures market suggests the odds of a move this year have fallen to about 50 percent.
“The game has shifted,” said Hideo Shimomura, the chief fund investor in Tokyo at Mitsubishi UFJ Kokusai Asset, which manages $100 billion. “It will be quite difficult to raise rates. There’s a high probability that they will not hike rates. They may even return to quantitative easing next year.”
The benchmark U.S. 10-year note yield declined two basis points, or 0.02 percentage point, to 2.16 percent as of 7:07 a.m. in New York, according to Bloomberg Bond Trader data.The 2 percent security due in August 2025 rose 5/32, or $1.56 per $1,000 face amount, to 98 18/32.
Treasuries pared their advance on Thursday as people familiar with the matter said China had cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago. China has communicated with U.S. authorities about the sales, said another person. They didn’t reveal the size of the disposals.

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