Treasuries little changed

US Treasury debt prices were little changed on Friday as hints of a deal in the Greek debt crisis were offset by overarching worries about how debt problems in Europe might eventually play out. Treasuries traded lower in price through much of the day, after France and Germany said they were united on a deal to resolve the Greek debt crisis, which undermined the safe-haven allure of US government debt.
Losses were pared late in the day, however, when ratings agency Moody's said it was putting Italy's credit ratings on review, reminding investors that the European debt situation remains extremely fragile. "Unfortunately, the news flows of European downgrades will only increase the volatility of the markets," said David Kelly, chief market strategist at J.P. Morgan Funds in New York. While "Greece is in the most financial trouble in Europe," Kelly noted that "other countries including Italy clearly have budget issues."
Benchmark 10-year Treasury notes traded unchanged in price to yield 2.93 percent, not far off a six-month low of 2.88 percent hit on Thursday. Yields have been tumbling steadily since early April as the European debt situation and signs the US economic recovery is stalling have boosted safety buying of Treasuries.
"You've had a six-week run of soft economic data and you still have a lot of uncertainty in the situation with Greece," said Kathy Jones, fixed-income strategist at Charles Schwab. Two-year Treasury notes on Friday traded unchanged in price to yield 0.39 percent, while 30-year bonds were down 8/32 in price with their yield rising to 4.20 percent from 4.18 percent on Thursday.