Treasury Yields Tumble to Records as Europe Spurs Bids

by 30 May 2012

Treasury 10-year note yields fell to a record low as investors sought refuge from the deteriorating credit conditions of European sovereign borrowers.

(Bloomberg) -- The benchmark yield reached 1.6170 percent, less than its previous all-time low of 1.6714 percent on Sept. 23, as Spain struggled to recapitalize its banks and Italian bonds fell as the country sold less than its target at a debt auction. The Federal Reserve announced Sept. 21 that it would buy $400 billion of longer-term Treasuries, funding the purchases with sales of shorter-term notes, in an effort to bolster the U.S. economy and spur jobs growth.

“The continued rally is evidence by flight to quality that is being exacerbated by the lack of other safe assets,” said Michael Pond, co-head of interest-rate strategy in New York at Barclays Plc, one of 21 primary dealers that trade with the Fed.“The lack of progress in Europe is causing increased angst in the Treasury market.

Benchmark 10-year note yields fell 11 basis points to 1.63 percent at 1:54 p.m. New York time after touching the lowest in Fed figures beginning in 1953. The 1.75 percent note due May 2022 added 1 1/32, or $10.31 per $1,000 face amount, to 101 3/32, according to Bloomberg Bond Trader prices. The yield drop is the biggest on the benchmark note since April.

Full article from Bloomberg



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