MW: U.S. 2-year yields hit record low on Greek worries
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose Monday, pushing 2-year yields to a record low, as renewed worries about a potential Greek default weighed on risky assets like stocks and boosted the appeal of U.S. government debt.
Yields on benchmark 10-year notes 10_YEAR -4.05% , which move inversely to price, fell 8 basis points to 1.97%. A basis point is 1/100th percentage point.
Yields on 2-year notes 2_YEAR -4.60% dropped 6 basis points to 0.13%. They touched 0.12%, the lowest on record.
Thirty-year-bond yields 30_YEAR -2.51% declined 8 basis points to 3.22%.
Euro-zone finance ministers on Friday delayed a decision on whether to approve their share of Greece’s upcoming 8 billion euro tranche of aid until October. And a meeting of euro-zone finance ministers over the weekend, with the first-time attendance of U.S. Treasury Secretary Timothy Geithner, resulted in no further progress.
Behind the bid for Treasury bonds is “the ongoing angst in Europe where the officials over the weekend were unable to come up with a plan to deal with the Greek debt crisis,” said David Ader, head of government-bond strategy at CRT Capital Group.
Greek officials will hold a conference call Monday with members of the auditing team sent by the so-called troika to confirm Greece’s compliance with the terms of last year’s 110 billion euro ($151.6 billion) bailout. The troika consists of the European Union, International Monetary Fund and European Central Bank. Read more on Greek bailout, Troika.
Extending gains
Bonds extended gains from Friday, which also stemmed from worries about European sovereign debt. See story on Friday’s bond market.
The main event of the week will be the Federal Reserve’s policy meeting, where traders expect officials to announce they will shift the central bank’s bond portfolio by buying longer-dated securities. See preview of Fed meeting.
“We expect non-disruptive policy: either no change or twist-light to not disappoint the market,” said bond strategists at Nomura Securities.
A heavier-handed action -- including actively selling its shorter-term securities or cutting the overnight interest rate paid to banks holding reserves at the Fed -- is unlikely as both would cause dislocations in short-term financial markets, they said.
