The 30-year US yield hit 5.29 per cent as the dollar fell to a two-month low
Long-bond yield rose to 5.29 per cent Monday; the dollar hit its lowest since early June. Despite 133.5 billion dollars of June net inflows, 94 of 104 economists expect the Fed to wait through year-end.
Economics & Markets··Midday
The 30-year yield reached 5.29 per cent, near its 2007 peak
According to The Spokesman-Review, the long bond's yield rose 3 basis points to 5.29 per cent on Monday. The yield moved closer to the 5.44 per cent peak of 2007. Last week the US Treasury sold 25 billion dollars of new 30-year bonds at 5.216 per cent, the highest for such an auction since 2001. Consumer prices rose 3.4 per cent in July from a year earlier. So far this month the 30-year yield has risen 13 basis points while the 2-year rate has fallen 12 basis points. Investors and analysts tie the selloff to a growing national debt, a flood of long-dated bond sales and inflation that has run above the Federal Reserve's target for five years. Anshul Pradhan of Barclays said they continue to argue against betting on a reversal of the long-end selloff.[1]
June net capital inflows into the US reached 133.5 billion dollars
US Treasury Department International Capital data show that in June the sum of net foreign acquisitions of long-term securities, short-term US securities and banking flows was a net inflow of 133.5 billion dollars. Net foreign acquisitions of long-term securities came to 172.7 billion dollars after adjustments. Private inflows were recorded at 85 billion dollars and official institution inflows at 48.4 billion dollars. In long-term securities, private foreign investors made net purchases of 169.8 billion dollars and official institutions net purchases of 37.3 billion dollars. In US Treasury Department bonds and notes, private investors bought a net 16.6 billion dollars while official institutions sold a net 9.8 billion dollars. The release carries no country breakdown.[2]
Economists expect the Fed to wait as the dollar weakened
In a Reuters poll conducted from 12 to 17 August and reported by Kitco News, 90 per cent of 104 economists said the Federal Reserve would leave its policy rate in the 3.50-3.75 per cent range at the 15-16 September meeting; 94 of them expect the Fed to wait until the end of the year. After unexpected job losses in July, market pricing flipped toward a near 70 per cent chance of a hold in September rather than an increase. Markets still price one increase by the end of December, with the conflict between the US and Iran in its sixth month and oil prices about 25 per cent above pre-war levels. In the same window the dollar fell to its lowest level in more than two months. The yen strengthened 0.13 per cent to around 159.15 per dollar, and the euro reached a two-month high at around 1.1614 dollars, up 0.18 per cent on the day. Investors trimmed expectations of a US rate increase after a run of softer economic data.[3], [4]
