Azernews.Az

By Bloomberg

U.S. government securities headed for the first weekly advance in more than a month, signaling that the worst of their selloff may be over.

The Bloomberg U.S. Treasury Bond Index has returned 0.5 percent this week through Thursday, set for its first gain since the period ended April 17. It’s still down 0.5 percent in May, on top of a 0.6 percent tumble last month.

While there were renewed signals from the Federal Reserve that it plans to raise interest rates this year, traders aren’t predicting more than one increase anytime soon and a Morgan Stanley index suggests policy makers won’t act until December.

“Even if the Fed raises the rate, they wouldn’t be aggressive,” said Park Sungjin, head of investment management at Meritz Securities Co. in Seoul, which has $7 billion in assets. “Some of the U.S. economic data have been a little bit disappointing,” which is also reviving demand for Treasuries.

Benchmark 10-year yields fell on Friday by two basis points, or 0.02 percentage point, to 2.12 percent as of 8:49 a.m. London time, leaving them nine basis points lower on the week, Bloomberg Bond Trader data show. The 2.125 percent note due in May 2025 rose 1/8, or $1.25 per $1,000 face amount, to 100 1/32.

The U.S. will probably cut its first-quarter gross domestic product estimate Friday to a 0.9 percent contraction, from the 0.2 percent expansion previously reported, according to a Bloomberg survey of economists.

Citigroup Inc.’s Economic Surprise Index showed U.S. data are falling short of expectations. The gauge was at minus 56.8, after falling to negative 73.3 in March, the lowest since 2011.

June should be a quiet month for Treasuries, judging by the median of economists’ forecasts. The 10-year yield will be 2.15 percent by the middle of the year, based on Bloomberg surveys.