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US T Bill Prices Steady

Thursday, July 19 17:26:48

US Treasury debt prices were steady to higher today with yields near record lows as disappointing economic news fed safe-haven bids for bonds and expectations of further stimulus moves by the Federal Reserve. The two-year note yield touched its lowest level since late January on growing bets that the Fed would lower the interest rate it pays banks on excess reserves they deposit with the Fed, analysts and traders said. Fed Chairman Ben Bernanke has said this is one possible action the Fed could take to stimulate growth. The European Central Bank dropped its deposit rate on excess bank reserves to zero last week. Expectations the Fed would follow the ECB's move pushed the two-year note yield to 0.214 percent, the lowest level since Jan. 30, according to Reuters data. US jobless claims jumped last week, while existing-home sales unexpectedly fell. The Philadelphia Federal Reserve said its index on business activity in the Mid-Atlantic region fell again. More signs of slowing U.S. growth, exacerbated by the festering euro zone debt crisis, have raised expectations the Fed would soon use its remaining policy tools, including cutting interest on excess reserves and a third bout of major bond purchases, known as QE3, to stimulate the economy. "These are disappointing data. This pushes the possibility of QE3 higher," said Wilmer Stith, who co-manages the $300 million Wilmington Broad Market Bond Fund in Baltimore. (C Reuters)