Treasurys edged higher Monday as investors balance ongoing recession fears with anticipation that the government will again announce billions of dollars worth of government debt auctions this week to fund its financial rescue programs.The government may need to finance about $1 trillion in programs that need funding by the end of the year, which will bring a great deal more supply to the market. Last week, the Treasury auctioned $34 billion of 2-year notes, $24 billion of 5-year bonds, and $27 billion in 4-week bills.
But demand for Treasurys remains, even with expanding supply, as the economic outlook remains murky. A survey of top economists from the National Association of Business Economistsshows they believe the economy has slipped into a recession, and that the economic downturn will last through 2009. Accordingly, investors predict that the Federal Reserve will cut rates to an unprecedented 0.5% after its Dec. 16 meeting in an effort to boost economic activity.
Looking forward: The bond market was mostly quiet Monday as investors awaited results from the U.S. presidential election Tuesday and the monthly employment data due at the end of the week, said William Larkin, portfolio manager at Cabot Money Management.
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