By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose Monday, pushing yields down, as traders remained uncertain about the outlook for growth while Japan tried to recover from last week’s earthquake and tsunami, keeping up interest in the relative security of U.S. debt.
Also, the European Union still has unaddressed problems with its peripheral members, and continuing war in Libya and Saudi troops entering Bahrain — where protests continue — have kept oil prices up.
Yields on 2-year notes (UST2YR 0.59, -0.05, -8.07%) , which are more sensitive to safe-haven flows, declined 4 basis points to 0.61%, touching their lowest level since early February. Bond yields move inversely to prices, and a basis point is 1/100th of a percent.
Yields on U.S. 10-year notes (UST10Y 3.36, -0.04, -1.21%) fell 3 basis points to 3.38%.
“The unfolding events in Japan, the Middle East and with the EU debt crisis should, in sum, keep a soft cap on Treasury rates,” said strategists at RBS Securities.
Treasury prices rose Friday, which analysts attributed to Japanese investors shifting foreign assets back into yen to support the rebuilding effort after Japan’s quake. Read about Treasury rally last week.
The yen dipped Monday as the Bank of Japan injected 15 trillion yen ($183 billion) into the financial system and enlarged its asset-purchase program. Read about Bank of Japan.
Last week, 10-year yields fell to the lowest level since the end of January as worries about political turmoil sweeping the Middle East and North Africa pushed oil prices to their highest point in 29 months, raising concerns that high energy prices would cut into expected economic growth.
