logo
  Join        Login             Stock Quote

Treasury Yields Capped By Public Sector Purchases

 January 15, 2013 09:39 AM


Treasury yields have risen at the start of the new year but have since stalled. 1.9% yield seems to be the ceiling on the 10-year note for now.
10y treasury yield (Bloomberg)

[Related -Greece And The Cemetery For Your Wealth]

Public sector entities continue to make it difficult for investors to short treasuries. The Fed's securities holdings hit a new record last week as the central bank began purchasing treasuries outright.

Outright securities holdings by the Fed (source: FRB)

[Related -All Signs Point To Higher Gold Prices]

But public sector treasury purchases are not limited to the Fed. Japan's new government wants to pull the nation out of the recession by devaluing the yen. The approach is two-fold: a massive quantitative easing program (see discussion) as well as direct market intervention. The market action by Japan's government involves selling the yen, buying dollars, and locking up the position in treasuries.

Bloomberg: - Abe's Liberal Democratic Party pledged to consider a fund to buy foreign securities that may amount to 50 trillion yen ($558 billion) according to Nomura Securities Co. and Kazumasa Iwata, a former Bank of Japan deputy governor. JPMorgan Securities Japan Co. says the total may be double that. The purchases would further weaken a currency that has depreciated 12 percent in four months as the nation suffers through its third recession since 2008.
The risk to treasuries in the longer term is that the Fed may pull the plug on asset purchases earlier than investors anticipate (see Bloomberg story). For now however the yield increases will be limited.
iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageGreece And The Cemetery For Your Wealth

The Greek default is merely the opening act of the worst sovereign-debt crisis in history. By the time it read on...

article imageAll Signs Point To Higher Gold Prices

In the face of historic monetary stimulus from nearly every major central bank in the world over the past read on...

article imageThe World's Top Irreplaceable Companies

I still get goose bumps when I recall the first time I saw them read on...

article imageThree Rocket Arc Patterns for Overseas ETFs

When doing ETF scans, I came across three “Rocket Arc” Patterns I wanted to share with read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

The World's Top Irreplaceable Companies
More Articles on: Economics Data



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.