"Blinders Find Andy Hardy" who's long the ten year looking for 3.6% ! Maybe Bubble Ben and Easy Al sleeping with this Goldilocks economy...
(Bloomberg) The 10-year Treasury yields 2.27 percentage points more than the two-year note, compared with an average of 2.37 percentage points this year, a sign investors don't expect inflation to accelerate. ``With inflation so low, there's still some value in the 10- year note even with yields so low, said Andrew Harding, who oversees $6 billion as director of taxable bonds at National City Investment Management Co. in Cleveland. ``We continue to believe that the Fed will stay on hold until mid-2005,'' Andy Bevan, senior bond economist in London at Goldman Sachs Group Inc., wrote in a note to clients. ``The employment report confirms that the pickup in growth over recent months has only translated into meager job creation.'' Goldman and UBS are among the 23 primary U.S. government securities dealers that deal directly with the Fed.
Lower Interest Cost : Lower Treasury yields may help the government curb its interest costs as it sells more debt to finance a widening budget deficit. President George W. Bush's administration estimates the deficit will reach a record $521 billion in the fiscal year ending Sept. 30. The Treasury said last month it will borrow a net $177 billion this quarter. The government said today it will sell $16 billion of five- year notes on Wednesday and $11 billion of 10-year notes on Thursday. No Treasury debt is maturing. Demand from so-called indirect bidders including foreign central banks is likely to be strong as a drop in the value of the dollar has prompted some to sell their currencies against the dollar to keep their exports competitive, Bank of America's Hiller said.
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