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Treasuries Little Changed as Yellen to Be Named Fed Chairman

October 9, 2013

Oct. 9 (Bloomberg) -- Treasuries were little changed after a White House official said Janet Yellen will be nominated to head the Federal Reserve, fueling bets the central bank will keep borrowing costs low and maintain policies to spur growth.

One-month bill rates fell after climbing to the highest level for the benchmark security since 2008 yesterday as the U.S. government approaches an Oct. 17 deadline to raise its debt ceiling. The Fed will release minutes from its Sept. 17-18 meeting at 2 p.m. and President Barack Obama will announce Yellen’s nomination at 3 p.m., a White House official said. Ten- year note yields fluctuated before the U.S. sells $21 billion of the securities.

"There are expectations for that dovish tone to continue going forward," said Justin Lederer, an interest-rate strategist in New York at Cantor Fitzgerald LP, one of 21 primary dealers that trade with the Fed. "Over the next few years, rates will remain low. Every day that goes on there are more concerns about the debt ceiling."

The 10-year yield rose one basis point, or 0.01 percentage point, to 2.64 percent at 8:34 a.m. New York time, according to Bloomberg Bond Trader prices. The 2.5 percent note due in August 2023 rose 2/32, or 63 cents per $1,000 face amount, to 98 3/4.

 

Bill Yields

 

Rates on Treasury bills due on Oct. 24 rose five basis points to 0.36 percent after being negative as recently as Sept. 27. Rates on bills due Nov. 21, just over a month after the debt-ceiling deadline, were 0.04 percent, down from 0.06 percent reached Oct. 4, the highest level since July 3.

The difference between what banks and the Treasury pay to borrow money for one month, known as the TED spread, yesterday inverted for the first time since Bloomberg started collecting the data in 2001. It was at minus five basis points today after falling to minus 16 basis points yesterday.

Fed Vice Chairman Yellen would succeed Chairman Ben S. Bernanke, whose term ends Jan. 31, after he cut interest rates to a record of almost zero in 2008 and began a bond-buying program, known as quantitative easing, to put downward pressure on borrowing costs.

 

‘Same Cloth’

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