标题: [讨论] Bonds Fall on Fear That Tax Cut Deal Will Add to Deficit [打印本页] 作者: 何鸿燊 时间: 2010-12-8 02:14 标题: Bonds Fall on Fear That Tax Cut Deal Will Add to Deficit
but Stocks Are Steady
By CHRISTINE HAUSER
The bond market on Tuesday had one of its worst days this year as it sold off over concerns that President Obama’s tax deal would add to the nation’s budget deficit.
Mr. Obama said on Monday night that he had an agreement with Congressional Republicans to extend the Bush-era tax cuts at all income levels for two years, raising concerns that such a move would increase the deficit even as it inspired confidence in the economy.
When the markets opened Tuesday, stock indexes rose and held gains most of the day as emboldened investors assumed more risk and drained life from the Treasury market.
The tax deal could mean an increase in growth rates in the United States, with rising inflation expectations and higher interest rates.
Bond prices fell, while yields shot up. Pressure built on the benchmark 10-year Treasury note. Its yield has risen since hitting 2.39 percent on Oct. 7.
On Tuesday, it rapidly crossed a psychological threshold of 3.08 percent. The yield on the 10-year note was 3.13 percent, up significantly from 2.93 percent late Monday. Its price dropped 1 23/32, to 95 22/32.
Higher yields, if sustained, will mean costlier home mortgage rates. The jump in rates has taken place even as the Federal Reserve has acted to contain borrowing costs to aid the recovery.
Anthony G. Valeri, a market strategist for LPL Financial, said the bond market performance also demonstrated anticipation that the Fed might raise interest rates sooner. “We had a pretty violent reaction to the passage of the tax cut extension,” he said.
In addition, the bond sell-off made investors timid before auctions this week of 10-year and 30-year notes. “As if today’s selling wasn’t enough, we have got fresh supply coming in tomorrow,” Mr. Valeri said.
The effect could also signal that the government will have to sell more bonds to finance the deficit, said Guy LeBas, the chief fixed income strategist for Janney Montgomery Scott.
But the tax deal could have positive implications for the economy, which spurred investors to reconsider the allocation of their assets. Consumer spending, business investment and corporate profits could increase, Wells Fargo economists said in a research note.
Stocks rallied on the news, but lost some steam at the end of the day. The Dow Jones industrial average fell 3.03 points, or 0.03 percent, to 11,359.16. The Standard & Poor’s 500-stock index hit a two-year high during the day but closed up just 0.63 points, or 0.05 percent, at 1,223.75 while the Nasdaq composite index was up 3.57 points, or 0.14 percent, at 2,598.49.
Analysts said investors were primed to leave havens and return to riskier equities because of upbeat trends in economic data — Friday’s jobs report notwithstanding — and signs of some calm in the European markets.
The CRB commodities index ended down but copper rose more than 1 percent on prospects of a recovery. Financials, which are affected more by interest rates, were weaker. But Citigroup was up more than 3.8 percent at $4.62 after the United States Treasury said late Monday that it had sold its remaining stake in the bank.A report from the Federal Reserve said total consumer credit outstanding rose at an annual rate of 1.7 percent to reach $2.39 trillion in October as nonrevolving accounts climbed.作者: 何鸿燊 时间: 2010-12-8 02:14
"In the short run this is good news, but two or three years down the road foreign buyers of U.S. Treasuries may start to balk," said David Carter, chief investment officer at Lenox Advisers in New York.
The move in Treasuries made the dollar more attractive to investors looking for higher yields, pushing it up against the yen, the euro and most emerging Asia currencies. The dollar index .DXY against a basket of major currencies was up 0.4 percent.作者: 西门吹雪 时间: 2010-12-8 11:29
