US Treasury Markets
11/4/2009 3:41 PM ET
(RTTNews) -
Treasuries fell for a third day on Wednesday, as the Federal Reserve left its key interest rate unchanged, in line with market expectations.
The benchmark ten-year yield opened lower and saw a sharp decline following the Fed announcement, finishing near its worst levels of the day. Subsequently, the yield on the note, which moves opposite of its price, closed at 3.546 percent, posting a gain of 7.3 basis points.
With the notable gain, the benchmark yield moved towards challenging October's two month closing high.
Bonds weakened further after the Federal Open Market Committee, the policy-setting arm of the Federal Reserve, said it was leaving its target for the federal funds rate at a range from zero to a quarter percent.
The central bank also reiterated its assessment that "exceptionally" low rates will continue for an "extended period."
Going into the announcement, the Fed was expected to leave rates unchanged, though there had been some expectation that the central bank would start to pave the way for an eventual rate hike down the road.
This morning, bonds opened on a down note and saw little reaction to the day's lukewarm economic data as traders largely focused on the Fed decision.
Private sector employment continued to decrease in the month of October, according to a report released by Automatic Data Processing, Inc. (ADP), although the pace of job losses slowed for the seventh consecutive month.
Separately, the Institute for Supply Management said that activity in the service sector grew for the second consecutive month in October, but the pace of growth unexpectedly slowed compared to the previous month.
In other news, today's refunding announcement from the Treasury Department revealed that the government will offer $81 billion in notes and bonds next week, composed of $40 billion in three-year notes, $25 billion in ten-year notes, and $16 billion in thirty-year bonds.
The Treasury also announced it would replace twenty-year TIPS with thirty-year TIPS. The new inflation protected security will be auctioned in January and August.
by RTT Staff Writer
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