US Treasuries Advance Ahead Of Debt Vote

Treasuries rose before the Republican-led House of Representatives plans a vote today to suspend the U.S.’s borrowing limit, removing the debt ceiling for now as a tool for seeking deeper spending cuts.

Thirty-year bonds held two days of gains before the Federal Reserve purchases up to $1.75 billion in longer-term debt. Treasuries were supported as global investors surveyed by Bloomberg said the state of America’s finances represents the greatest risk to the world economy. Inflation expectations dropped from the highest in almost three months as the U.S. prepares to sell $15 billion in 10-year inflation-indexed debt tomorrow.

“We are still pretty constrained by the range and the debt-ceiling debate,” said Larry Milstein, managing director in New York of government-debt trading at R.W. Pressprich & Co. “We are clearly closer to the bottom of the range, 1.75 to 2.05 percent on the 10-year. We may test the lower ends of this range.”

The benchmark 10-year note yield fell three basis points, or 0.03 percentage point, to 1.81 percent at 8:43 a.m. New York time, according to Bloomberg Bond Trader prices. The 1.625 percent note due November 2022 gained 1/4, or $2.50 per $1,000 face amount, to 98 10/32. The 30-year bond yield declined two basis points to 3 percent.

U.S. 10-year yields will increase to 2.27 percent by year- end, according to the average forecast in a Bloomberg survey of financial companies with the most recent projections given the heaviest weightings.

Bloomberg

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