By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose Monday, pushing yields down to the lowest level since early December, as euro-zone finance ministers put off announcing a bailout plan for Greece and said Greek politicians had to first take steps toward approving additional spending cuts.
Yields on 10-year notes 10_YEAR +0.07% , which move inversely to prices, fell 5 basis points to 2.92%, after touching the lowest level in more than seven months. A basis point is 1/100th of a percentage point.
Yields on 2-year notes 2_YEAR +3.13% declined 1 basis point to 0.38%, just a whisper above a record low touched recently.
Thirty-year bond yields 30_YEAR -0.29% slipped 3 basis points to 4.17%.
The European finance ministers delayed a decision over handing another 12 billion euros ($17 billion) of bailouts funds to Greece until the debt-stricken country agrees to new spending cuts. A key vote may happen early this week. Read more on Greece, EU.
“The absence of resolution on the Greek bailout has driven a modest flight-to-quality bid for the market,” said David Ader and Ian Lyngen, bond strategists at CRT Capital Group.
Last week, bonds rallied, with 2-year note yields falling for a 10th week. The back and forth between Greece, European political leaders and the European Central Bank about how to deal with Greece and other debt-laden nations led investors away from the region’s debt and into the relative safe-haven afforded by U.S. bonds. See story on Treasury rally last week.
There are no major U.S. economic reports scheduled for release but two Federal Reserve buybacks of bonds, doubling-up ahead of the policy-setting Federal Open Market Committee’s meeting Tuesday and Wednesday.
Analysts expect little change in the U.S. central bank’s comments on its target interest rate or bond-buying program, but they do see the Fed downgrading its forecasts for the economy — something that would generally be supportive of Treasury bonds. Read more on Fed meeting, forecasts.
“The most significant event that our economists expect is language adjusting the trajectory of the economic recovery and labor markets to a softer tone as the Fed has now seen several significant soft prints in the interim from the April meeting,” said bond strategists at Nomura Securities.
