Treasury Yields Fall to Lowest in 6 Weeks on Fed Stimulus Policy

Bloomberg (25/9) -- Treasury 10-year note yields fell to the lowest level in six weeks as investors bet the Federal Reserve will maintain monetary stimulus as it awaits a pick-up in economic growth, stoking demand for government debt. Treasuries remained higher as the U.S. sold $33 billion of two-year notes at a yield of 0.348 percent, below a forecast of 0.354 percent in a Bloomberg News survey of seven of the Federal Reserve’s 21 primary dealers. The Fed last week maintained its policy of buying $85 billion of debt a month to put downward pressure on borrowing costs, causing investors to push back forecasts for when the central bank will raise interest rates. There’s a “gradual acceptance by the market that the Fed will remain accommodative,” said Aaron Kohli, an interest-rate strategist in New York at BNP Paribas SA, a primary dealer. “The market is going to be grinding to lower yields over the next few months.” The benchmark 10-year note yield fell five basis points, or 0.05 percentage point, to 2.66 percent at 5 p.m. in New York, based on Bloomberg Bond Trader data, after declining five basis points in the previous two trading days. The yield touched 2.64 percent, the lowest since Aug. 13. The price of the 2.5 percent security due in August 2023 added 3/8, or $3.75 per $1,000 face value, to 98 21/32. The current two-year yield was little changed at 0.33 percent.