By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose Tuesday, pushing yields to their lowest in almost a month, as Greece’s decision to call a referendum on its bailout package stirred new fears that it could default.
Yields on 10-year notes 10_YEAR -5.49% , which move inversely to prices, fell 10 basis points to 2.01%. If that’s the level at which the notes close, it would be the lowest since Oct. 6.
A basis point is 1/100th of a percentage point.
Yields on 30-year bonds 30_YEAR -4.70% fell 11 basis points to 3.04%.
Two-year note yields 2_YEAR +1.63% slipped 1 basis point to 0.24%.
Greek Prime Minister George Papandreou said Monday he would put the nation’s latest bailout plan to a referendum. Analysts say that could derail the deal worked out by European leaders to contain the region’s debt crisis.
Papandreou will face a confidence vote, possibly later this week. A referendum may not come until January, which would mean more uncertainty until then. Read story on Greek referendum.
“If Greece says no to the austerity, then [its] future in the euro [zone] … is in doubt and the whole deal just agreed to would be moot,” said David Ader, head of government bond strategy at CRT Capital Group.
Treasurys are likely to stay within a range, but the lower end for 10-year yields could be 1.87%, he said.
Coming up is a report from the Institute for Supply Management on the nation’s manufacturing sector.
Also, the Federal Reserve will begin its two-day meeting. Analysts have low expectations for any major policy announcement at this time, given that in September the Fed began a program to extend the maturity of its bond portfolio by buying longer-dated securities and selling shorter-term notes. Read more on Fed meeting.
On Monday, Treasurys gained, largely because of expectations that Japan would invest dollars from its intervention to weaken the yen back into U.S. securities, possibly at next week’s major quarterly auctions. Read more on Treasury rally, yen intervention.
But even then many expressed worries about the lack of details in the grand plan that came out of last week’s summit of European Union leaders.
