US Treasuries soared on Monday, with 30-year bonds posting their best day since the Federal Reserve announced its first massive stimulus program, as stock market losses bolstered the bid for safe-haven US government debt. Investors also jumped in to buy bonds to square up positions from overall poor performance in October, while the bankruptcy of futures broker MF Global added to the risk-off trade.
"It's the move down in stocks and also one of those 'Who's next?' trades prompted by the MF Global bankruptcy filing," said Cary Leahey, managing director and senior economist at Decision Economics in New York. MF Global Holdings, also a primary dealer run by former Goldman Sachs chief, Jon Corzine, filed for Chapter 11 bankruptcy after a tentative deal with a buyer fell through. The New York Federal Reserve suspended the firm from conducting new business with the central bank.
"You had the continued deterioration of the outlook for the European situation, you have equities trading off and you also have a fairly large month-end buying program going through," said Scott Graham, head of government bond trading at BMO Capital Markets in Chicago.
Thirty-year Treasury bonds on Monday traded 4-27/32 higher in price, with their yields plummeting to 3.14 percent from 3.37 percent late Friday. Bonds had their best single-day performance since March 18, 2009, when the Federal Reserve announced its first round of quantitative easing under which it bought $300 billion of Treasuries in an effort to stimulate the economy. Overall, however, bonds were set for the worst monthly performance since January, with yields having gained over 40 basis points in October.
Benchmark 10-year Treasury notes traded 1-21/32 higher in price on Monday to yield 2.12 percent, down from 2.32 percent late Friday. While benchmark notes were on track for the best single-day performance since early August in the wake of Standard & Poor's downgrade of the US credit rating, the notes were also set for the worst monthly performance since December 2010.
Comments
Comments are closed for this article.