NEW YORK: US Treasury debt prices rose on Monday in a safe-haven bid on concerns about weak U.S. economic data and the steep drop in Brazil's stock market following the re-election of incumbent leftist Dilma Rousseff.
Economic data on the world's largest economy wobbled again on Monday, with a slowing in the U.S. services sector and a less-than-expected rise in pending home sales, elevating U.S. bond prices.
U.S. government 30-year bond yields, which move inversely with prices, fell after four straight days of gains, while yields on benchmark 10-year Treasuries slid for a second consecutive session.
The Brazilian stock market, meanwhile, was down nearly 5 percent in mid-morning trading, while the real tumbled to a near six-year low against the dollar as Rousseff, who has been blamed for the country's sluggish economy, won re-election Sunday night. Many investors had backed rival candidate Aecio Neves. Brazil's outcome has turned investors cautious on risky assets overall.
"The bid in Treasuries has a little more to do with Brazil, following the re-election of Rousseff, " said Tom di Galoma, head of rates and credit trading at ED&F Man in New York.
"People are concerned about the economy in Brazil and emerging markets in general. So I'm looking at the yield of 10-year notes sort of supported at 2.30 percent, going back to 2.20 at some point."
Worries about European banks following a health check that showed one in five of the region's banks failed the landmark stress tests by the European Central Bank also helped boosted Treasury debt prices, analysts said.
Benchmark 10-year Treasury notes last traded up 6/32 in price with a yield of 2.251 percent from 2.275 percent late on Friday. The 10-year yield fell to the day's low after contracts to buy previously owned U.S. homes rebounded less than expected in September, pointing to just a gradual housing market recovery.
The 30-year bonds rose 15/32 in price for a yield of 3.026 percent, from Friday's 3.046 percent. U.S. 30-year yields hit session highs after data showed the pace of growth in the U.S. services sector slowed in October compared with the previous month to its lowest level in six months.
The flash services sector Purchasing Managers Index compiled by information services company Markit slipped to 57.3 in October from 58.9 in September, hitting its lowest level since April. A Reuters poll forecast the October reading at 58.0.
Also on Monday, the New York Federal Reserve conducted what could well be the last of the quantitative easing buybacks, purchasing between 850 million to $1.05 billion in bonds dated from February 15, 2036 through August 15, 2044. sale.
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