By Agency Reporter

Monday, 22 Nov 2010

NEW YORK: Treasury 10-year note yields posted the biggest two-week increase in almost a year as sentiment increased that the Federal Reserve will be successful in boosting economic growth and avoiding deflation, Bloomberg reported on Friday.

The yield on the 10-year note increased 34 basis points for the two weeks ended on Friday, the most since December 2009 as a group, including former Republican government officials and economists urged the Fed to rethink quantitative easing.

Fed Chairman, Ben Bernanke, defended his monetary stimulus to fellow central bankers on Thursday, saying it will aid the world economy. The Fed on November 23 will release minutes of the Federal Open Market Committee meeting held earlier this month.

A Treasury trader, Royal Bank of Canada, Mr. Dan Mulholland, said, ”The market has been under pressure for the last couple of weeks due to rhetoric within the Fed and around the world about QE and because of the unwind of profitable trades set up for QE.”

”You‘ve had positive economic data points,” he added.

The Fed chief is confronting criticism from officials in countries, including China and Brazil, who say the November 3 decision to buy $600bn in Treasury securities has weakened the dollar and contributed to flows of capital to emerging markets.

The policy has also come under fire in the US, where critics, including Republican members of Congress, have said it risks fuelling inflation and asset bubbles.

 

Source: Punch