US Treasury yields rise on Buffett-Goldman news

US Treasury yields rise on Buffett-Goldman news

Tokyo: US Treasury yields rose on Wednesday, 24 September, after news of Warren Buffett’s Berkshire Hathaway Inc. investing $5 billion in Goldman Sachs Group Inc. boosted US stock futures in Asian trade, reducing the safe-haven appeal of debt.

But yields remained off earlier peaks, capped by uncertainty over whether a US proposed $700 bailout plan can be quickly enacted in an effort to resolve the financial crisis.

“The market is still nervous about the outcome of the proposed U.S. plan as politics seems to be making the deal more complicated," said Ryuji Shimai, a market analyst at Shinko Securities in Tokyo.

The benchmark 10-year note fell 3/32 in price, pushing yields up to 3.816% from 3.803% late in New York on Tuesday.

The 10-year yield jumped as much as 5 basis points to 3.856% earlier in the session as S&P 500 futures soared as much as 23 points.

The two-year note fell 1/32 in price to yield 2.101% up 2.8 basis points, after rising as high as 2.138% earlier in the day.

Analysts said the market was also concerned that the US bailout plan could involve the federal government printing money to take on bad assets and ending up with a lot more debt to fund, when it is already likely to need to borrow around $1 trillion in the current financial year.

The yields on shorter maturities slipped from the day’s highs as credit markets remained under severe strain, with banks reluctant to make loans to each other. The prospect of scarce credit for companies and consumers further dimmed the outlook for the overall economy.

Three-month US Treasury bill rates were down to 0.72%, dropping further from 0.8% late New York on Tuesday.

As markets keep track of developments on the bailout plan, a variety of economic data and other events will punctuate the trading session later on Wednesday.

Existing home sales data for August is due to be released at 1400 GMT while Federal Reserve Chairman Ben Bernanke is set to testify on the economic outlook before Congress also at 1400 GMT.

Following Tuesday’s testimony at the Senate Banking Committee, Treasury Secretary Henry Paulson, Fed Chairman Bernanke are scheduled to testify before the House Financial Services Committee on Wednesday afternoon on the government’s proposal to intervene in capital markets.