"Bank deposits continue to explode and in turn they continue to buy Treasuries as the economy loses momentum"
- Michael Mata, a money manager in Atlanta at ING Investment Management Americas
The difference between U.S. bank loans and deposits is increasing, providing more room for lenders to purchase government securities. Deposits rose 3.3 per cent to 8.88 trillion dollars in the two months ended July 31 and lending to businesses rose 0.7 per cent to 7.11 trillion dollars, Federal Reserve data show.
"Bank deposits continue to explode and in turn they continue to buy Treasuries as the economy loses momentum, inflation is trending down, Europe continues to hang over our heads and political uncertainty reigns" said Michael Mata, a money manager in Atlanta at ING Investment Management Americas.
"There is no reason for interest rates to climb in any meaningful way any time soon."
U.S. ten-year bond yields rose 87 basis points to 1.81 per cent on Friday. Yields on two-year Treasury notes gained 40 basis points to 0.29 per cent.
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