NEW YORK (MarketWatch) -- Treasurys extended a weeklong rally Friday as investors bought up long maturities to close their books on a banner month for U.S. government debt, which benefited from a flight to safe-haven securities.
In light trading following Thursday's Thanksgiving Day recess, prices on 10-year Treasurys rose 0.8% to 107.04, pushing yields ) down to 2.9191%, 6 basis points lower than Wednesday and the lowest since at least 1986. One basis point is 1/100th of a percentage point.
Yields on the 30-year bond fell to 3.447%, down 8 basis points.
The two-year note also rallied, with yields falling to 7 basis points to 1.0044%.
The day's strong performance followed big moves earlier in the week, when negative economic data and new lending programs from the Federal Reserve spurred buying of longer dated U.S. debt.
"When the Fed made its announcement on Tueday, the long end was the place to go," said Roseanne Briggen, Treasury market analyst at Informa.
As the close of the trading month neared, longer-dated maturities continued to rally as institutional investors bought notes and bonds to match their portfolio to benchmarks.
The Fed Tuesday said it would lend up to $200 billion to support the issuance of consumer and small businmess debt, plus said it would buy up to $500 billion in mortage-backed securities backed by Fannie Mae , Freddie Mac and Ginnie Mae. It also plans to purchase up to $100 billion in direct debt of Fannie Mae and the Federal Home Loan Banks. See story.
On Friday, stocks posted the fifth straight session of gains as investors waited to see how retailers fared on one of the most important spending days of the year. The Dow Jones Industrial Average ) gained 1.2%, while the S&P 500 rose 0.96%. See Market Snapshot.
Concerns that the global economy was headed into a prolonged recession -- on top of continued losses and collapses in the financial sector -- made for steep returns in U.S. government debt this month.
The Merrill Lynch U.S. Treasury Index returned about 5% as of Thursday, putting its gains year-to-date at almost 10%.
"Treasurys had a very good performance during the month, but it was very, very choppy," Briggen said. "Investors are still willing to take almost zero yield just to be in something safe and liquid. That's why there will be a continual bid to Treasurys."
Traders are watching for results of Black Friday, the start of the Christmas shopping season. Retailers are expected to have their worst holiday season in years.
