MW: U.S. 10-year yields set low on weak stocks, data
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices extended gains on Thursday, pushing 10-year yields to a record low under 2%, as weak U.S. economic data added to worries about global growth that sent stock markets around the world plunging and inspiring a rush to the relative safety of U.S. bonds.
Yields on 10-year notes 10_YEAR -6.41% , which move inversely to prices, fell 16 basis points to 2.01%. They fell as low as 1.99%, blowing through the previous record low of 2.03% set on Aug. 9. A basis point is 1/100th of a percentage point.
Yields on 2-year notes 2_YEAR -6.03% slipped 2 basis points to 0.18%, after falling to less than 1 basis point above the all-time low of 0.16%.
Thirty-year bond yields 30_YEAR -4.91% declined 19 basis points to 3.37%. They touched 3.35%, the lowest since January 2009. The all-time low was 2.51%, set in December 2008.
Bonds extended gains after the Philadelphia Federal Reserve’s manufacturing index dropped much more than forecast this month. A separate report showed U.S. existing home sales fell in July. See more on existing-home sales.
The data, along with increasing worries, sent U.S. stocks down sharply, the Dow Jones Industrial Average DJIA -3.82% losing more than 500 points.
“Lower domestic equities and a refocus on the weakening economic outlook supported the long-end of the Treasury market,” said strategists at CRT Capital Group.
Fears of a looming economic slowdown also supported bonds on Wednesday. Read more about bond market.
Bonds held onto gains after a pair of reports showed U.S. jobless claims increased to 408,000 in the latest week and consumer inflation rose 0.5% in July, both higher than economists expected. See more on jobless claims.
The four-week moving average of claims declined, seen as positive for the labor market, and inflation rose closer to the Federal Reserve’s target levels, which analysts say may limit officials’ ability to make monetary policy more accommodative.
However, “inflation data are not a driver in this flight-to-quality environment,” said Ian Lyngen at CRT.
At 11 a.m. Eastern time, the Treasury Department will announce how much in debt it will auction next week. Analysts at Wrightson ICAP expect the U.S. to sell $35 billion each in 2-year and 5-year notes 5_YEAR -9.40% and $29 billion in 7-year debt 7_YEAR -8.13% . Those amounts would be the same as at the last several monthly sales of the maturities.
