Bond market waiting for Bernanke

Treasuries, bonds, yieldsClick on the chart for addtional bond data. By Catherine Clifford, staff reporter


NEW YORK (CNNMoney.com) -- Bond traders are waiting to hear what Fed chairman Ben Bernanke has to say about inflation and the economy when he holds his first post-Fed meeting press conference Wednesday afternoon.

"It is going to be very important," said Mary Ann Hurley, vice president of fixed income trading at D.A. Davidson in Seattle. "Here is all this talk about Bernanke wanting to increase Fed transparency and now is the time we can see whether the Fed is transparent or not."

Most experts don't expect the Fed will raise its key lending rate, which has been sitting near 0% since December 2008. And most also don't expect the Fed to announce another stimulus plan.

The central bank's $600 billion bond buying spree, known as QE2, is coming to a close in June. The quantitative easing program is expected to wind down in an orderly fashion with not expectation of a QE3 announcement.

"They are going to be looking for further direction from the Fed post June," said Hurley.

And given the fact that this is Bernanke's first press conference of this sort, market experts say trading could be bumpy.

"Maybe he stumbles some words, maybe the market misinterprets, there is a whole spectrum of potential uncertainties," said Kim Rupert, fixed income analyst at Action Economics. "He will have to address the inflation issue with rising oil prices and commodity prices."

Bernanke's press conference also comes one day before the government reports its first reading on first-quarter gross domestic product -- the broadest measure of the nation's economic health.

A CNNMoney survey of economists predicts that the pace of growth will have slowed to just 2% in the first three months of this year. Fourth-quarter GDP was 3.1%.

A sluggish economic recovery and weak housing market have kept investors hedging their bets in the safe haven of Uncle Sam's debt. Meanwhile, ever expanding deficits combined with inflation woes have undercut the value of longer term bond investments. The result is Treasury yields mired in a tight range, with the benchmark 10-year Treasury yield hovering just under 3.5% for months.

Yields slid Tuesday as prices edged higher. The 10-year Treasury yield dipped to 3.31%, the 30-year bond fell to 4.39%, the 5-year bond ticked up to 2.02%, and the 2-year dropped to 0.62%. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.36%4.24%
15 yr fixed3.39%3.26%
5/1 ARM3.36%3.27%
30 yr refi4.34%4.22%
15 yr refi3.38%3.24%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 16,408.54 -16.31 -0.10%
Nasdaq 4,095.52 9.29 0.23%
S&P 500 1,864.85 2.54 0.14%
Treasuries 2.72 0.08 3.19%
Data as of 6:04pm ET
Company Price Change % Change
Bank of America Corp... 16.15 0.00 0.00%
Facebook Inc 58.94 0.00 0.00%
General Electric Co 26.56 0.00 0.00%
Cisco Systems Inc 23.21 0.00 0.00%
Micron Technology In... 23.91 0.00 0.00%
Data as of Apr 17

Sections

General Mills has scrapped a controversial change to its fine print that some read as eliminating customers' right to sue the company. More

Obamacare sign ups hit 8 million, though final enrollment remains to be seen. More

Office for iPad move is a symbolic victory for Nadella's Microsoft, but the company is still weighed down by many of the same old issues. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

As Detroit moves closer to reaching a bankruptcy deal, retired civilian workers are poised to be left worse off than firemen and police officers. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.