U.S. government securities continued their slide yesterday as market participants reevaluated positions amid a growing sense that another Federal Reserve tightening is near. Prices on the benchmark 30-year Treasury bond fell more than 1/4 point to yield 7.79%, as hedge funds and commodity funds took advantage of every price uptick to sell securities.
The December futures contract closed down 1/4 point at 99.05. "There's a reevaluation going on, given recent data about the inflation outlook and the outlook for a near-term move" by the Fed, said Donglas Schindewolf, money market economist at Smith Barney Inc. "Most people were comfortable until recently that the Fed would be on hold for a while. Now that comfort level has been reduced. Activity late last week and so far this week is reflecting adjustments to portfolios to accommodate that change in risk profile."