NEW YORK: US Treasury debt prices fell on Thursday as investors scaled back their safe-haven bond holdings and stock markets worldwide recouped more losses after their rout a week ago when Britain voted to leave the European Union.
Even with two consecutive days of losses, the US government debt market is poised for a strong first half as investors have loaded up on low-risk government bonds due to global economic worries and negative yields in Europe and Japan, analysts said. The surprise outcome of the Brexit referendum intensified fears about a further slowdown in business activities across the globe, they added.
Brexit's possible domestic repercussions led Bank of England Governor Mark Carney to say on Thursday the central bank would probably need to inject more stimulus over the summer. Carney's remarks sent British Gilts yields to record lows and briefly lifted Treasuries prices out of the red.
"There are still a lot of uncertainties that could weigh on growth. People don't think growth would pick up much," said Praveen Korapaty, head of US rates at Credit Suisse in New York.
Thursday's data hinted at resilience in the US labor and factory sectors, but investors remained worried that global risks could endanger the modest US economic expansion.
"There may be more of a growth crisis than any acute financial stress" from Brexit, said Stanley Sun, interest rate strategist at Nomura Securities International in New York.
Benchmark 10-year Treasury notes were down 8/32 in price, yielding 1.502 percent which was up 2 basis points from Wednesday.
The 30-year bond was down 23/32 in price for a yield of 2.315 percent, up 3 basis points on the day.
The three major US stock indexes rose for a third straight session with the Standard & Poor's 500 index up 1 percent.
Bond purchases for portfolio rebalancing at quarter-end, together with persistent overseas demand, helped limit the fall in Treasury prices, analysts said.
A global bond market rally after the Brexit outcome raised the global total of sovereign debt with negative yields to $11.7 trillion as of Monday, up $1.3 trillion from the end of May, Fitch Ratings said on Wednesday.
Through Wednesday, Treasuries have produced a 5.45 percent total return since the beginning of the year, led by a 16.52 percent gain among issues that mature in 20 years and beyond , according to indexes compiled by Barclays.
This compared with 2.45 percent year-to-date return on S&P 500 shares.
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