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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Ben Bernanke, Treasury Salesman
Bad news is good news for a government selling debt. |
Forbes.com - Dec. 7, 2009 - Matthew Craft
The promise of continued low-interest rates from the Federal Reserve while investors move to safer assets in order to lock in this year's stock and commodities winnings should support the auction of another $74 billion in U.S. government debt this week.
A speech by Federal Reserve Chairman Ben Bernanke on Monday dampened speculation that the central bank could begin lifting short-term rates from near zero. Bernanke said the economy faced "formidable headwinds" -- a weak labor market, "subdued" inflation and tight credit – and repeated his stance that rates will remain low for "an extended period."
The talk put a floor under the Treasury market, said William O'Donnell, head of U.S. treasury strategy at RBS Securities, a primary dealer at Treasury sales. "Bernanke's words were good for the auctions," he said.
The Treasury will sell $40 billion in three-year notes on Tuesday, $21 billion in ten-year notes on Wednesday and $13 billion in 30-year bonds on Thursday.
If Bernanke had hinted at a rate hike, investors would have pushed for a higher yield on government debt. After the speech, O'Donnell said investors and central banks will feel more comfortable bidding for Treasury bonds without the fear of getting blindsided by a surprise announcement from the Fed. The Federal Open Market Committee, which oversees interest rates, has its final two-day meeting on Dec. 15 and 16.
After the government announced last Friday that the pace of layoffs had slowed, investors placed bets that the Federal Reserve would begin raising short-term rates sooner than expected. They sold Treasury bonds, which pushed yields higher. The dollar index, which pits the greenback against a basket of currencies, touched a one-month high of 76.18.
Bernanke quickly erased much of that on Monday. By the late afternoon, the yield on the 10-year Treasury hovered around 3.43% and the dollar index around 75.77.
Low interest rates weigh on the dollar by making other countries with higher rates more appealing. The dollar becomes a funding currency: traders borrow in U.S. dollars to invest elsewhere fueling carry trades.
The Fed's near-zero target is meant to encourage lending by strong banks, like JPMorgan Chase ( JPM - news - people ), and to bolster struggling ones like Citigroup ( C - news - people ). It also provides indirect support to the Treasury's sales. Cheap borrowing has driven investors into riskier assets, helping to fuel rallies in stocks, bonds and other investments. Bank of America ( BAC - news - people ) was even able to climb to the top of the U.S. stock league tables by underwriting its own offerings. (See "BofA's Not Free And Clear") while Barclays ( BCS - news - people ) has managed to put its Lehman Brothers ( LEHMQ - news - people ) assets to good use and has emerged among the top corporate bond issuers (See "Life After Lehman"). As the year comes to a close, money managers are locking in some of these gains by selling off a portion of their winnings and socking the cash in Treasuries.
Auctions aren't simply for buying Treasury debt, they're opportunities to sell other assets, said George Goncalves, head of fixed income rates strategy at Cantor Fitzgerald. "They're liquidity events, he said, "an easy way to take down securities in a short amount of time."
The cash often winds up in 10-year notes, a benchmark for other borrowing rates and one of the easiest securities to trade.
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