By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose on Thursday, pushing yields down, as worries that oil costing more than $100 a barrel will blunt the global economic recovery had investors seeking the shelter of U.S. debt.
Gains were limited ahead of the government’s sale of 7-year notes (UST7YR 2.84, -0.03, -1.15%) , the last auction of the week.
“A post-auction rally could unfold strongly, as Treasury prices have been somewhat capped this week by supply, in the face of geopolitical developments which could send yields much lower over coming weeks if we see a debilitating and lasting spike in oil prices,” said Richard Gilhooly, director of rates strategy at TD Securities.
Yields on 10-year notes (UST10Y 3.44, -0.04, -1.12%) , which move inversely to prices, fell 5 basis points to 3.44%. A basis point is one one-hundredth of a percent.
Yields on 2-year notes (UST2YR 0.73, -0.02, -2.66%) slipped 1 basis point to 0.74%.
Treasury bonds are playing their traditional role as a haven of stability and relative safety amid times of uncertainty around the world, this time stemming from political upheavals in the Mideast and North Africa.
However, the concerns for the region have also turned to worries about how much higher fuel prices will slow down an economic recovery that was just beginning to stabilize.
Energy takes up a large portion of spending in emerging economies, but even in the U.S., higher fuel prices are likely to blunt consumer spending.
“The market continues to trade like buyers are just beneath the surface and traders are concerned [about] a full-blown meltdown in North Africa,” said Thomas di Galoma, head of U.S. fixed-income trading for Guggenheim Securities.
U.S. bonds held onto gains after a report showed U.S. first-time jobless claims fell 22,000 to 391,000 in the latest week, lower than analysts expected. Read more on jobless claims.
A separate report showed orders for durable goods rose 2.7% in January. See story on durable goods.
Still to come are data on home sales and a Federal Reserve buyback.
The data will “all likely take a back seat the anxiety events of the Mideast East and equities and crude,” said John Spinello, Treasury strategist at Jefferies & Co.
