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B$ The Bell, Moonday, March 15


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=DJ Tsys Selling Off On Report BOJ Mulls Easing Intervention

By Michael Mackenzie

Of DOW JONES NEWSWIRES

 

NEW YORK (Dow Jones)--Treasurys were shaken midafternoon Monday by a press report that the Bank of Japan is considering reducing its large-scale currency market intervention by the end of March.

 

Such a move would coincide with the end of Japan's fiscal year and remove a crucial prop from the Treasurys market. The Nikkei Financial Daily reported in its Tuesday edition that Bank of Japan, which acts in foreign exchange markets on behalf of Japan's Ministry of Finance, is weighing an exit strategy for its yen-weakening market interventions.

 

"Some central bank officials predict that it will walk away from large-scale interventions by the end of this month and that the upward pressure on the yen, even without such currency-boosting measures, will abate beginning in April," it said.

 

The report sent Treasury yields to new highs for the session as prices swung from modest gains to losses. However, subsequent suspicion that the BOJ had stepped into the markets to purchase dollars halted the selloff.

 

Japan has been a massive force in foreign exchange markets over the past year, repeatedly buying dollars for yen in a bid to stop a strong yen from derailing its export-led recovery. It typically parks those dollars in the Treasurys market, where it is the largest foreign presence.

 

Against this backdrop, traders say a scaling back in Japan's intervention could push yields higher. "This is putting pressure on the bond market," said Andrew Brenner, head of fixed income at Investec U.S. Inc in New York. "This could be the catalyst to send the market lower,' he added.

 

The scale of support for the bond market in recent months has been underscored by hefty purchases at Treasury auctions by indirect bidders, a classification that includes foreign central banks. At the February quarterly debt sales by Treasury, indirect bids for the three-, five-, and 10-year maturities averaged around 45%.

 

Data released earlier Monday by the Treasury Department showed a surge in foreign purchases of U.S. government debt during January. Foreigners recorded $92.0 billion in net purchases of U.S. securities, the biggest month since May 2003, and up from $75.8 billion in December.

 

Purchases by Japanese investors spiked 31.9%, reflecting massive amounts of BOJ intervention to support the dollar.

 

At 1:25 p.m. EST (1825 GMT), the benchmark 10-year note was at 101 27/32, down 3/32 to yield 3.77%. The 30-year bond was unchanged at 110 2/32 to yield 4.71%.

 

The five-year note was at 99 15/32, down 2/32 to yield 2.74%, while the three-year note was down 2/32 at 100 29/32 to yield 1.93%. The two-year note was down 2/32 at 100 5/32 to yield 1.54%.

 

Dow Jones Newswires

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=DJ Many OPEC Ministers Favor Cut; Eyeing Specs, Surplus

 

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By Sally Jones, Simeon Kerr & Adam Smallman

Of DOW JONES NEWSWIRES

 

 

CAIRO (Dow Jones)--Many OPEC ministers appear to still favor a cut in output from April 1, apprehensive that the double-whammy of a supply overhang and speculators exiting the market in droves will equal a price slump.

 

Almost half of the Organization of Petroleum Exporting Countries' members were present at the Gas Exporting Countries' Forum in Cairo, which formally ended late Sunday.

 

OPEC kingpin Saudi Arabia was absent from the forum.

 

The group's 10 members, excluding Iraq, have committed themselves to lowering its self-imposed output ceiling by 1 million barrels a day from April 1, in addition to reining in some 1.5 million b/d of supply over its current 24.5 million b/d ceiling. They will meet in Vienna March 31 to discuss policy.

 

Venezuelan Oil Minister Rafael Ramirez said Monday that all OPEC members were on board to cut output starting April 1.

 

"We have a consensus to cut in April," he said.

Dow Jones Newswire

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=DJ Crude Oil May Hit $40 A Barrel - Fimat's Kilduff

 

 

 

NEW YORK (Dow Jones)--Crude oil prices may hit loftier heights before making a sharp turn lower, said John Kilduff, senior vice president of energy risk management at Fimat USA.

 

"Prices are going to head towards pre-war highs of nearly $40 a barrel," said Kilduff, speaking on Crapvision Monday. He predicted that when prices do turn back down, the change could be "dramatic" and prices could hit $30 a barrel or cheaper.

 

Kilduff sees jet fuel prices following the trend, he added.

Dow Jones Newswire

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