the one and only xjo thread, page-54

Treasuries Drop; Yield Reaches 5% for First Time Since August

By Agnes Lovasz and Kevin Lim

June 7 (Bloomberg) -- Treasuries fell, pushing the 10-year note yield above 5 percent for the first time since August, after New Zealand unexpectedly raised interest rates, igniting concern that faster global economic growth may cause other central banks to boost borrowing costs.

Futures traders added to wagers for further increases by the European Central Bank after it lifted rates to a six-year high yesterday and reduced bets the Federal Reserve will need to lower borrowing costs this year. The Bank of England kept its target rate at 5.5 percent today, the highest since April 2001.

``Investors took fright at the New Zealand move,'' said Stuart Thomson, who manages 23 billion pounds ($45.7 billion) in bonds at Resolution Investment Management Ltd. in Glasgow, Scotland. ``Global growth is too strong, yields have to rise. The trend is bearish.''

Benchmark 10-year note yields rose 6 basis points to 5.03 percent at 7:50 a.m. in New York, according to Cantor Fitzgerald LP. The yield is the highest since July 28. The price of the 4 1/2 percent bond due May 2017 fell 1/2, or $5 per $1,000 face amount, to 96 28/32. Bond yields move inversely to prices. Two- year note yields rose 5 basis points to 5 percent.