NEW YORK: US Treasury debt prices rose on Monday as surging oil prices and Europe's festering debt crisis undermined confidence in a potential global economic recovery and boosted demand for safe-haven US government debt.
Stock market losses, the result of the same concerns, bolstered the bid for Treasuries.
Still, Treasury yields remained ensconced in a four-month range after the benchmark 10-year yield touched its highest level in about month last week as Greece finally received a 130 billion euro bailout to avert an unruly default.
Benchmark 10-year Treasuries were up 16/32 in price to yield 1.92 percent, down from 1.98 percent late Friday, and solidly in the range between 1.79 percent to 2.17 percent, in place since early November. They rose as high as 2.08 percent yield last week in reaction to the Greece bailout.
Tension between Iran and the West as well as the civil war in Syria have led to higher oil prices. That has aroused fear that high energy costs could hurt consumers' ability to purchase goods and services and stunt global economic growth, already burdened by an intractable euro zone debt crisis, market participants said.
Thirty-year bonds rose 1-2/32 in price, their yields easing to 3.05 percent from 3.10 percent on Friday.
Two-year notes, their rates anchored by the Fed's near-zero short-term-interest-rate policy, rose 1/32, allowing their yields to ease to 0.30 percent from 0.31 percent Friday.
Brent crude oil futures topped $124 a barrel on Monday, but were retreating after a week of gains. Investors feared higher energy costs will slow business and consumer spending, threatening to tip the world back into recession.
On the European debt front, leading G20 economies told Europe over the weekend it must put up more money to fight its debt crisis, pressuring Germany to drop its opposition to a bigger bailout fund.
Nonetheless, the European Central Bank's planned mid-week injection of low-cost three-year loans into the banking system, expected to total about half a trillion euros ($675 billion), supported prices of peripheral euro zone government debt.
Federal Reserve purchases of seven-, 10- and 30-year securities on Monday, Tuesday, and Wednesday should be supportive for Treasuries, analysts said.
Market participants will also be on the lookout for Fed Chairman Ben Bernanke's Congressional testimony on Wednesday and Thursday.
"We expect the tight range in place since November will be maintained in the near term as the Fed continues the (Operation) Twist and talks about a possible third round of quantitative easing," said Chris Bury, co-head of US rates sales and trading at Jefferies & Co in New York.
Operation Twist involves selling shorter-dated securities and using the proceeds to buy longer-dated securities.
The calendar of economic data also gets busy as the week progresses, analysts noted. Highlights include the revision to fourth-quarter gross domestic product on Wednesday, the February Institute for Supply Management manufacturing index on Thursday, and weekly jobless claims on Thursday.
Aside from Bernanke's testimony, the Federal Open Market Committee will release its Beige Book narrative on business conditions across the nation on Wednesday.
The Treasury will conduct its usual bill auctions, including a 49-day cash management bill, during the week. No coupon auctions are scheduled.
Comments
Comments are closed.