-->U.S. Treasury Notes Decline as Bush Wins Election, Supply Looms
Nov. 3 (Bloomberg) -- U.S. Treasury notes fell as Republican President George W. Bush won re-election, raising speculation tax cuts that have contributed to a record budget gap will force the administration to increase borrowing.

The government said it would auction $51 billion of notes next week to help pay for a budget shortfall that reached $412.6 billion in the year ended Sept. 30, an all-time high. The Standard & Poor's 500 Index surged 1.2 percent, further reducing demand for government securities.

``We're looking at $400 billion plus (deficits) as far as the eye can see; that's a negative for the bond market,'' said Bill Gross, who manages the world's biggest bond fund at Pacific Investment Management Co. in Newport Beach, California.

The 4 1/4 percent note due in August 2014 fell about 3/8, or $3.75 per $1,000 face amount, to 101 1/4 at 1:32 p.m. in New York, according to bond broker Cantor Fitzgerald LP. Its yield rose 5 basis points, or 0.05 percentage points, to 4.09 percent, after earlier reaching 4.17 percent, the highest since Oct. 8.

Bush's Democratic challenger, Massachusetts Senator John Kerry, conceded yesterday's election, ending the prospect of a drawn-out contest that had increased demand for Treasuries and other safe investments.

Ten-year note yields dropped more than 50 basis points between Election Day in 2000 and Dec. 12, when the Supreme Court blocked recounts in Florida, handing the presidency to Bush.

`Uncertainty Premium'

``You don't have this uncertainty premium that's been holding the market pretty close to 4 percent'' on the 10-year note, said Mark Mahoney, a government bond trader at UBS Securities LLC in Stamford, Connecticut. If a Nov. 5 Labor Department report on job creation is strong, ``it allows the market to trade down heavily'' until next week's auctions.

The 10-year note's yield may rise to 4.25 percent, Mahoney said. UBS is one of the 22 primary U.S. government securities dealers that trade with the Federal Reserve's New York branch.

The Treasury will auction $22 billion in three-year notes Monday, $15 billion in five-year securities Tuesday, and $14 billion in 10-year debt Wednesday to raise $3 billion in cash. The balance will be used to pay off maturing debt.

The Nov. 5 Labor Department report is expected to show the economy created 175,000 jobs last month, the most since May, compared with 96,000 in September, according to the median estimate economists in a Bloomberg survey.

Treasuries stayed lower after an index of the U.S. services industry rose more than expected. The Institute for Supply Management's gauge of non-manufacturing industries such as banking, construction and retailing climbed to 59.8 in October from 56.7 in September. Economists polled by Bloomberg expected the index to rise to 58.

The gauge has shown expansion, marked by readings higher than 50, for 19 straight months.

Permanent Tax Cuts

Bush's party expanded its majorities in the U.S. Senate and House of Representatives, giving him additional leeway to pursue tax cuts that may lead to faster economic growth.

``A Bush victory translates into great certainty with respect to the legislative agenda -- good news for the stock market and the economy, and therefore bearish for Treasuries,'' said Tony Crescenzi, chief bond-market strategist at Miller Tabak & Co. in New York.

Since the economy contracted in the third quarter of 2001, annual rates of economic growth have ranged between 0.7 percent and 7.4 percent and averaged 3.3 percent. The economy grew at a 4.5 percent rate in the first quarter of this year, at a 3.3 percent rate in the second quarter, and an estimated 3.7 percent during the third quarter.

Economic Growth

In 1996 through 1999, quarterly growth rates averaged 4.4 percent.

U.S. gross domestic product is expected to grow at a 3.8 percent rate in the fourth quarter and 3.6 percent in 2005, according to the median forecasts in a Bloomberg News poll taken from Oct. 1 to Oct. 11.

The budget deficit expanded to a record $413 billion in the fiscal year that ended Sept. 30 from $377 billion in fiscal 2003. Total marketable Treasury debt increased by a record $390 billion to $3.85 trillion at the end of September from a year earlier, Treasury data show.

Last month, the U.S. reached the $7.384 trillion statutory limit on its ability to borrow, forcing the Treasury to shuffle funds in accounts until Congress acts to raise the ceiling. Treasury officials said today the November note auctions will proceed and settle as scheduled. Additional debt sales, including a planned Nov. 16 auction of 4-week bills, may be affected by the debt limit.

`Rates Go Up'

``The size of the deficit is going to be larger no matter who wins the election,'' Daniel Fuss, a bond fund manager who is vice chairman of Loomis Sayles & Co. in Boston, said before Kerry conceded. ``Normally if you get more of something dumped on the market, the price goes down, and in this case interest rates go up.''

Treasury yields mainly declined over the past four years as the deficit swelled, showing that slowing economic growth and inflation trumped supply as traders and investors set prices for U.S. government debt.

``The big question remains whether demand will continue to be enough to absorb the higher issuance,'' said Jeff Given, who manages $10 billion of bonds at John Hancock Funds in Boston. ``If foreign central banks and governments continue to buy Treasuries, we won't see a total disaster in the bond market.''

To keep their currencies from appreciating against the dollar, which would make their exports more expensive, China, Japan and other Asian countries sell their currencies for dollars. At least some of the dollar proceeds are invested in U.S. Treasury securities.

China, Japan

Japan is the largest foreign holder of Treasuries with $722 billion. Its central bank spent a record 14.8 trillion yen in the first quarter buying dollars to help slow the yen's surge to a four-year high against the dollar.

China, the second-largest foreign holder of Treasuries with $135 billion, buys dollars to ensure its currency stays at about 8.3 yuan to the dollar, where it has been fixed for nine years.

Federal Reserve policy makers, who raised their target for the overnight lending rate between banks by a quarter percentage point three times this year to 1.75 percent, are expected to raise it to 2 percent at their next meeting on Nov. 10.

Investors are divided on whether the central bank will lift the rate again on Dec. 14, its final meeting of the year.

``There's a lot of information the bond market has to digest in the next seven days,'' said Lundy Wright, head of U.S. government bond trading at Nomura Securities International Inc. in New York. ``After the election, traders have the refunding, the jobs report, and the Fed meeting next week.''

The yield on the December Eurodollar futures contract was at about 2.35 percent.

The yield rose from 2.26 percent two weeks ago, indicating traders are increasing bets the Fed's target will reach 2.25 percent by early 2005. The contract settles to a three-month lending rate that has exceeded the Fed's target by an average of 22 basis points in the past 10 years.



To contact the reporter on this story:
Elizabeth Stanton in New York at estanton@bloomberg.net;
Vivianne C. Rodrigues in New York at vrodrigues@bloomberg.net.

To contact the editor responsible for this story:
Dan Moss at dmoss@bloomberg.net.
Last Updated: November 3, 2004 13:38 EST


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-->Die neue Amtsperiode fängt ja schon symptomatisch an:
"Wer hat noch nicht, wer will noch mehr" wird man sich in der Bush-Admin wohl gedacht haben.


- The Bush administration announced Wednesday that it will run out of maneuvering room to manage the government's massive borrowing needs in two weeks, putting more pressure on Congress to raise the debt ceiling when it convenes for a special post-election session.


Treasury Department officials announced that they will be able to conduct a scheduled series of debt auctions next week to raise $51 billion. However, an auction of four-week Treasury bills due to be completed on Nov. 18 will have to be postponed unless Congress acts before then to raise the debt ceiling.

"Due to debt limit constraints, we currently do not have the capacity to settle our four-week bill auction scheduled to settle on Nov. 18," Timothy Bitsberger, acting assistant Treasury secretary for financial markets, said in a statement....


Republicans have proposed that the debt ceiling be raised by $690 billion to $8.074 trillion, an amount that would get the government through next September, when the 2005 budget year ends.



na, wieviele Nachtragshaushalte werden es bis dahin noch werden?[img][/img] Man darf gespannt sein, ob die USA (ohne die Bundesstaaten und Kommunen) mit einem Haushaltsdefizit von gut 6% (doppelte Höhe des Maastrichtkriteriums!) auskommen werden.


gruss,
Sorrento
<ul> ~ weiter geht es hier</ul>