Volume Fell
Treasury trading volume dropped yesterday to $286 billion, the lowest level since Feb. 22, according to ICAP Plc, the largest inter-dealer broker of U.S. government debt. Daily volume reached $491 billion on Feb. 1, the highest since August 2011. The average daily volume for 2013 is $302 billion, compared with $238 billion in 2012.
Congress mandated $1.2 trillion in across-the-board spending cuts to begin today and be spread over nine years, as part of a 2011 agreement to increase the U.S. debt limit. Reductions totaling $85 billion are scheduled to take effect in the remaining seven months of this fiscal year.
China’s official Purchasing Managers’ Index was 50.1 in February, the weakest in five months and down from 50.4 in January, a report from the National Bureau of Statistics and China Federation of Logistics and Purchasing showed today in Beijing.
European Manufacturing
A gauge of manufacturing in the 17-nation euro area was below the 50 level that separates growth from contraction, London-based Markit Economics said today. The euro area’s annual inflation rate fell more than economists predicted in February, to 1.8 percent, according to separate data from the European Union’s statistics office in Luxembourg.
Italy’s 10-year yield rose six basis points to 4.79 percent today. The Stoxx Europe 600 Index fell 0.9 percent, and futures on the Dow Jones Industrial Average declined 0.3 percent.
Bernanke signaled in congressional testimony this week that the Fed is prepared to keep buying bonds at its present pace, as he dismissed concern that record easing risks sparking inflation or asset-price bubbles. The central bank purchases $85 billion of Treasury and mortgage debt a month, putting downward pressure on borrowing costs to fuel growth.
The Fed is scheduled to purchase as much as $1 billion in notes today maturing from August 2023 to February 2031.
Manufacturing in the U.S. expanded for a third month in February, according to the forecast in a Bloomberg survey of economists. The Institute for Supply Management’s factory index was 52.5, versus 53.1 in January, based on the survey before the report at 10 a.m. New York time. A number greater than 50 shows growth.