Reply #64: Treasuries reel as Katrina's sway on Fed reassessed [View All]

[UpInArms]

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-09-12T194553Z_01_N12555324_RTRIDST_0_MARKETS-BONDS-UPDATE-2.XML

NEW YORK, Sept 12 (Reuters) - U.S. Treasury debt prices retreated on Monday as investors worried a data-filled week could reinforce the need for further interest rate hikes from the Federal Reserve.

Many of the figures will not yet reflect possible fallout from Hurricane Katrina, but analysts will comb through them nonetheless in an attempt to gauge whether a recent recalibration of monetary policy forecasts was appropriate.

After the hurricane, investors rushed to reprice interest rate futures on the expectation that the storm's economic impact would be so large that the Fed would need to stop raising interest rates.

But now that the dust had settled and central bank officials had a chance to chime in, strategists were beginning to see a near-term pause as less likely.

"It's been pretty clear from Fedspeak that they intend to hike in September, and that they will exhibit temporary flexibility if they see weakness," said David Ader, U.S. government bond strategist at RBS Greenwich Capital.

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