Treasuries fluctuated as Democrat and Republican lawmakers
have just hours left to agree on a budget deal that both sides say is necessary
to prevent a blow to the nation’s economy, Bloomberg reports.
U.S. government securities gave up their first-place rank
among world bonds in 2012 as signs of improvement in the global economy cut
demand for the safety of Treasuries. Benchmark notes rose last week as
lawmakers failed to reach agreement to avoid the so-called fiscal cliff of more
than $600 billion in spending cuts and tax increases set to start tomorrow.
Allowing those changes to take effect would cause a recession in the first half
of 2013, according to the Congressional Budget Office.
“We’ve had a pretty
significant move in Treasuries in the past few days,” said Owen Callan, an
analyst at Danske Bank A/S (DANSKE) in Dublin. “The market got quite complacent
and assumed a deal would be done a lot earlier. It does appear that the two
parties are still some way apart but I still think they will come up with some
kind of deal or stopgap. Both sides recognize the danger of not coming to an
agreement.” The 10-year yield was little
changed at 1.70 percent at 7:37 a.m. in New York, according to Bloomberg Bond
Trader prices…..
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