As Treasury two-year yields dip a meager three basis points from the record low this week, an industry report scheduled for release late in the week is expected to show a slump in manufacturing this month.
The Treasury is set to sell off over $30 billion worth of two-year yield today, which is the first of three scheduled note sales this week. $35 billion worth of five-year debts are expected to be up for auction tomorrow, followed by $29 billion in seven-year securities on Wednesday. Analysts expect that yield prices will fall again by the end of the year, and for the Federal Reserve to increase purchases from treasury.
The Fed may well be in place to buy up this week, as a statement released September 21 announced that it is prepared to further assist the economy and to try and keep costs from falling further. This has fuelled speculation that the Federal Reserve is looking to make quantitative easing purchases, whereby it will add securities to its holdings.
With Treasury selling securities and the Fed looking to buy, analysts are hopeful that the low yield rankings will ease if the Fed makes the purchase. Johan Jooste, from the Bank of America Corp.’s Merrill Lynch Global Wealth Management unit in London worries that if the Fed doesn’t purchase the securities on Wednesday then “it’s very hard to justify where yields are now, unless we are indeed on the verge of something really awful.”
