NEW YORK: U.S. Treasuries prices slumped on Friday as a resurgence in oil and stock prices that had been battered by fears over slowing global growth and a glut of crude sparked a fresh wave of selling of safe-haven government debt.
Benchmark yields rose further from the 3-1/2-month lows set on Wednesday, as Wall Street jumped and U.S. oil futures scored solid gains again. Bond yields retreated from their highest levels in three sessions but managed to end higher on the week.
Those second-day oil and equity rallies followed more comments from European Central Bank President Mario Draghi, who hinted the ECB was open to more stimulus to counter weak growth and inflation in the euro zone.
"The tone earlier this week was very bearish. Risk assets were oversold and flight-to-safety assets were overbought," said Mike Lorizio, head of Treasuries trading at John Hancock Asset Management in Boston.
Stronger-than-expected data on U.S. manufacturing and a record 14.7 percent jump in existing home sales in December also eased pessimism over the economy and pared bets the Federal Reserve would raise interest rates no more than once, if at all, in 2016.
Some analysts said investors were reluctant to further cut bond holdings ahead of the Fed's policy meeting next Tuesday and Wednesday.
"Many people are still skeptical about risk assets given the pervasive bearishness out there," said Karl Haeling, vice president at Landesbank Baden-Wurttemberg in New York.
Benchmark 10-year Treasury notes were down 9/32 in price to yield of 2.052 percent, up 3 basis points from late on Thursday. The 10-year yield climbed from 1.939 percent on Wednesday, the lowest since early October.
The 30-year bond was down 19/32 in price, yielding 2.825 percent, up 3 basis points. The 30-year yield touched 2.711 percent on Wednesday, the lowest since Aug. 24, according to Reuters data.
The two-year yield, more sensitive to changes in traders' view of Fed policy, rose 4 basis points to 0.869 percent.
U.S. crude futures settled up 9 percent to $32.19 a barrel as cold weather raised demand for home heating. On Wednesday, they fell to their lowest since September 2003.
Bets on more ECB stimulus, together with higher oil prices, lifted Wall Street shares for a second day, with the Standard & Poor's 500 index up 1.7 percent in late trading.
Comments
Comments are closed for this article.