Treasuries gain

US Treasury debt prices rose on Friday as more cash flowed into safe-haven government bonds, driven in part by a dismal US consumer sentiment reading for August. Treasuries were on track to finish their first AA-plus rated week with the largest one-week price gains since December 2008. "Treasuries are still the place to hide, especially going into the weekend," said Todd Colvin, a futures trader at MF Global Securities in Chicago.
US consumer sentiment worsened sharply in early August, falling to the lowest index level since 1980, according to the Thomson Reuters/University of Michigan's preliminary reading. "The last few weeks have just been brutal for consumers in the headlines," said Guy LeBas, chief fixed income strategist with Janney Montgomery Scott in Philadelphia.
"You have this politicking in Washington, the stock market volatility, which is just unprecedented, and you lost your AAA rating in the US." The news pushed Treasury prices higher on what traders said was an otherwise calm day compared with the volatile conditions earlier this week.
"After yesterday's sell-off, value buyers came in even though yields were only at 2.35 in the 10-year note," LeBas said of Friday's trade. A ban on short-selling in stocks by some European countries helped stabilise global equities, but demand for Treasuries remained high, with traders continuing to cite their safe-haven status. "There's still a flight to quality," said Joe Larizza, director of government and agencies trading at Vining Sparks in Memphis. "Why would you put a ban on short sales if there was nothing wrong?"
The benchmark 10-year Treasury note was last trading 25/32 higher in price and yielding 2.26 percent, down from 2.35 percent late on Thursday. The 30-year Treasury bond was last yielding 3.74 percent, down from 3.76 percent at Thursday's close. A report from the US Commerce Department showing July retail sales posted the largest gains since March failed to curb Treasuries' price gains for long. But some economists thought the retail sales number would make a difference to a marketplace full of bets that the United States was headed for another recession.