(Bloomberg) — U.S. 10-year Treasuries ended two days of declines as BlackRock Inc., the world’s biggest money manager, said markets would be able to handle an interest-rate increase by the Federal Reserve.
Yields on two-year notes slipped from their highest level since April 2011 as traders awaited the outcome of the Fed’s two-day policy meeting, where officials led by Chair Janet Yellen may raise rates for the first time since 2006. BlackRock said the pace of rate increases rather than the date of the first move will drive market reaction. Treasuries held gains after separate reports showed new-home construction fell in August and jobless claims declined last week to the lowest level in two months.
“If they did go today I actually think the market could absorb it relatively reasonably,” Stephen Cohen, BlackRock’s London-based chief investment strategist for international fixed income, said in an interview on Bloomberg Television’s “Countdown” with Guy Johnson and Anna Edwards.
“People won’t actually remember what the date was, whether it was September or December,” he said. “They’ll remember what happened afterwards and what is the path of rates from here on. That is going to determine the path of markets.”
The yield on the benchmark 10-year Treasury fell one basis point, or 0.01 percentage point, to 2.28 percent as of 9:21 a.m. in New York, based on Bloomberg Bond Trader data. The yield climbed 11 basis points in the previous two days. The 2 percent security due in August 2025 advanced 2/32, or $0.63 per $1,000 face amount, to 97 15/32.
Two-year note yields dropped one basis point to 0.80 percent, after climbing Wednesday to a 4 1/2-year high of 0.815 percent.
While mixed data cloud the economic picture as policy makers meet, futures traders and economists are sending different signals about whether the Fed will raise rates.