Log in
Forgot password ?
Become a member for free
Sign up
Sign up
Dynamic quotes 

4-Traders Homepage  >  News


Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 

US Treasurys Fight Back With Biggest Gain In Two Weeks

share with twitter share with LinkedIn share with facebook
share via e-mail
03/21/2012 | 09:08pm CEST
   By Cynthia Lin 

Investors returned to the U.S. Treasurys market Wednesday, taking advantage of the recent price drop that had pumped yields up to their most attractive levels in months.

The benchmark 10-year Treasury yield, which moves inversely to its price, tumbled eight basis points on the day to 2.292%. That is the biggest one-day yield-decline since March 6, when worries about Greece's debt restructuring deal drove investors into the safety of U.S. government bonds.

These gains reverse part of the sharp selloff that started a week ago after the Federal Reserve made a slight nod to recent improvements in the U.S. economy. Investors took it as a sign that another bond-buying program from the Fed was now less likely, sparking the swift downturn in Treasurys.

Ten-year yields snapped up 0.37 percentage point in the course of a week, hitting a near five-month high of 2.399% Tuesday. These elevated yields helped to lure some buyers back into the safe-harbor market.

"We went too far too fast," said Sean Simko, fixed-income portfolio manager at SEI Investment. He used the price-drop as an opportunity to scoop up more Treasurys. "Taking a step back, U.S. data have been positive, but sustainability is the question."

Apparently at least some other investors did the same as Treasury prices took a one-way ride up Wednesday. By late-afternoon trading, the market sat at session highs with 10-year notes up 22/32 in price to yield 2.292%. The 30-year bond rose 1 13/32 to yield 3.379%, while two-year notes gained 1/32 to yield 0.371%.

These gains offer a welcome break from the recent selling streak. And many analysts cite a new 10-year trading range of 2.1% to 2.4% in the coming months. This is a notch higher than the 1.8% to 2.1% region where these yields were stuck at for more than four months before the past week's selloff.

But while a number of market observers have been nudging up their year-end yield forecasts, they also stress that it doesn't signal the start of a "bond bear market." The Fed still has a heavy hand as a buyer in the market, and there remain many economic uncertainties that can prompt investors to seek out the safety of U.S. Treasurys.

"We have a hard time believing the Fed won't do everything in its power to keep the 10-year Treasury under 2.5%," says Matthew Tuttle, chief investment officer at Tuttle Wealth Management.

David Rolley, international bond fund manager at Loomis Sayles, said oil prices, China's slowdown, Europe's credit crisis and the U.S.'s fiscal situation are on his list of worries. He sees 10-year notes yielding 2.5% to 2.75% at year-end.

Where yields are headed next depends heavily on the Fed's next policy move. Investors will be paying extra attention to Fed officials' remarks for hints about the central bank's stance on the economy. Regional Federal Reserve bank president Charles Evans and James Bullard are scheduled to speak Thursday.

  US Swap Spreads Mixed 

The U.S. two-year swap spread, which measures the difference between the two-year swap rate and two-year Treasury yield and is a main gauge of credit risks, was 0.25 basis point wider at 26.75 basis points. The 10-year swap spread was 0.50 basis point tighter at 7.50 basis points.

    3/4%    2-year    99 24/32   up 1/32      0.371%   -2.4BP 
    1 1/4%  3-Year    99 13/32   up 4/32      0.576%   -4.0BP 
    2 1/4%  5-year    98 24/32   up 10/32     1.136%   -6.6BP 
    2 7/8%  7-Year    97 29/32   up 15/32     1.694%   -7.5BP 
    3 5/8%  10-year   97 13/32   up 22/32     2.292%   -8.0BP 
    4 3/4%  30-year   95  7/32   up 1 13/32   3.379%   -7.9BP 
    2-10-Yr Yield Spread: 192.5BPS v 196.3BPS 

Source: Tradeweb

-By Cynthia Lin, Dow Jones Newswires; 212-416-4403; [email protected]

share with twitter share with LinkedIn share with facebook
share via e-mail
Latest news
Date Title
10:52a OT Provides Instant Card Issuance for Mashreq Bank in UAE
10:51a UAE Exchange Partners with Oberthur Technologies to Launch Wearable Contactless Payments
10:40a KOREA ELECTRIC POWER : Iran, South Korea Ink 2 MoUs to Boost Energy Cooperation
10:40a DME DUBAI MERCANTILE EXCHANGE : SOMO sells 2 million barrels of Basrah Light crude oil on DME Auctions platform
10:38a MSCI : Emirates NBD Asset Management seeks to spread wings in global outreach
10:37a SNC LAVALIN : wins Aramco contract
10:37a WESTERN UNION : Green Bangla and Seham triumph
10:37a KONE : wins order for 8 new projects
10:37a REZIDOR HOTEL : set to open 11 hotels in Saudi Arabia, 5 in UAE this year
10:35a UPDATE : Buller River search
Latest news
Hot News 
5.97%REGENERON PHARMACEUTICALS : Sanofi beats profit forecasts, upbeat on prospects for eczema drug
3.71%Google parent Alphabet's profit up 29 percent on strong ad sales
-3.42%INTEL : revenue misses estimates as data centre growth slows
-4.06%Baidu's Finance Chief to Lead Investment Firm Baidu Capital -- Update
-2.02%STARBUCKS : results disappoint, new CEO must brew up growth
Most Read News
04/29 INTERRA RESOURCES : Teen robs man in Walgreens parking lot with toy gun
12:05a Off target in 2016, global elite regroup at Milken conference
12:07a SERVICOM : Niger Delta Basin Development Authority re-inaugurates SERVICOM
04/29 TRANSCANADA : Landowners plan to oppose pipeline at hearing
12:07a CHEVRON : Surging Chevron, Exxon profits signal oil industry turnaround
Most recommended articles
04/27 JPMorgan Chase & Co leaves blockchain consortium R3
12:54a Global pension funds warm to India's solar power ambitions
12:05a Off target in 2016, global elite regroup at Milken conference
04/29DJPETER NICHOLAS : Trump Says He Has Delivered '100 Days of Action'
04/29 Hot earnings to keep fire under growth-stock rally