US Debt In Demand as Italian Turmoil Renews Refuge Appeal

Treasury 10-year note yields fell to a three-week low as investors sought safety amid concern Italy faces an uphill battle in forming a government coalition to resolve a deadlock caused by elections last month.

U.S. government securities rose for a third day as data showed pending home sales in the U.S. dropped last month, adding to speculation the Federal Reserve will keep interest rates low. Treasuries also gained as concern Cyprus’s aid package may be a precedent for future rescues fueled bets on more instability in Europe. The U.S. will sell $35 billion of five-year notes.

“There’s a lot of negative news coming out of Europe, and it’s bringing in pretty good buying in the Treasury market,” said Jason Rogan, director of U.S. government trading at Guggenheim Partners LLC, a New York-based brokerage for institutional investors. Italy is “struggling to form a government. That’s adding to the fear trade.”

The 10-year note yield slid six basis points, or 0.06 percentage point, to 1.85 percent at 10:08 a.m. New York time, according to Bloomberg Bond Trader prices. It touched 1.84 percent, the lowest since March 4. The price of the benchmark 2 percent securities due in February 2023 gained 18/32, or $5.63 per $1,000 face amount, to 101 3/8.

Yields on the current five-year note dropped four basis points to 0.73 percent, the lowest since Jan. 16.

Bloomberg

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