New York – According to Bloomberg Bond Trader prices, the U.S. 30-year yield fell eight basis points this week, or 0.08 percentage point, to 2.38 percent in New York. The 3 percent security maturing in November 2044 rose 1 25/32, or $17.81 per $1,000 face amount, to 113 9/32.
The yield fell for a fourth week and reached a record low 2.35 percent on Jan. 21. The U.S. will sell $26 billion in two-year notes, $35 billion in five-year notes and $29 billion in seven-year debt on three consecutive days starting Jan. 27. The two-year sale was reduced by $1 billion from the prior auction, further limiting the amount of high quality debt available.
“The central banks have been pushed to justify their existence. They’ve gone into no-man’s land,” said Richard Gilhooly who is an interest-rate strategist in New York at Toronto-Dominion Bank’s TD Securities unit, one of 22 primary dealers that trade with the Fed.
As monetary policy makers in Europe, the U.K. and Canada assume more-stimulative postures, government bonds rallied around the world. Longer-maturity debt gained, with yields in Germany, Spain and Switzerland reaching record lows after the European Central Bank announcement of a larger-than-forecast bond purchase plan, the Bank of Canada’s unexpected lowering of its benchmark rate and Bank of England policy makers dropping a call for a rate increase. U.S. yields also approached all-time lows with the Federal Reserve forecast to hold interest rates at virtually zero next week.
The European Central Bank will buy government bonds as part of an asset-purchase program worth about 1.1 trillion euros ($1.23 trillion), or 60 billion euros a month, President Mario Draghi announced Jan. 22 in Frankfurt, sparking a jump in European bonds. Along with Canada, Denmark cut interest rates this week, while the Bank of Japan boosted a lending program and stuck to its plan to increase the monetary base at an annual pace of 80 trillion yen ($680 billion).