Business

Sun Jun 22 19:26:44 PDT 2008

By Wes Goodman

June 23 (Bloomberg) — Treasuries were little changed on speculation U.S. industry reports tomorrow will show falling house prices are eroding confidence among consumers.

Notes held gains from last week after traders raised bets that the Federal Reserve will hold borrowing costs unchanged at a policy meeting this week to prevent further credit-market writedowns. The Treasury Department plans to sell $30 billion of two-year notes tomorrow and $20 billion of five-year debt on June 26.

“The market should rally this week,” said Matthew Johnson, senior economist in Sydney at ICAP Australia Ltd., part of the world’s largest inter-bank broker. “We’re seeing another wave of the credit crunch. I don’t think the Fed can be confident about lifting rates.”

The two-year note yield declined 1 basis point to 2.88 percent as of 9:24 a.m. in Tokyo, according to bond broker BGCantor Market Data. The 2.625 percent security due in May 2010 traded at a price of 99 17/32. The yield fell 15 basis points last week. A basis point is 0.01 percentage point.

A report from S&P/Case-Shiller tomorrow will show U.S. home prices in 20 metropolitan areas dropped by 15.9 percent in April from a year earlier, the most since records were first published in 2001, a Bloomberg News survey of economists shows.

The Conference Board’s consumer confidence index probably fell to 56.4 in June, the lowest since October 1992, from 57.2 in May, according to a separate survey.

Futures on the Chicago Board of Trade showed a 10 percent chance the Fed will raise the target rate for overnight lending between banks by a quarter-percentage point on June 25, compared with 22 percent odds a week ago.

To contact the reporters on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net.