Yields have longest run of weekly slide since 2008
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose Friday, pushing 10-year yields to their lowest level in three months, after a report on the U.S. labor market in April raised worries about the outlook for economic growth, boosting interest in safer assets like U.S. bonds instead of stocks.
Yields on 10-year notes 10_YEAR -2.84% , which move inversely to prices, fell 6 basis points to 1.88%. A basis point is one one-hundredth of a percentage point.
Benchmark 10-year yields haven’t closed under 1.90% since Feb. 6.
Yields on 5-year notes 5_YEAR -6.05% declined 5 basis points to 0.77%, their lowest since mid-February.
Thirty-year-bond yields 30_YEAR -1.19% fell 4 basis points to 3.08%, the lowest in almost two weeks.
Yields have hovered this week near their lowest level since February as more recent data left investors disappointed and worried about the U.S. economy’s growth potential.
The U.S. Labor Department said the economy added 115,000 jobs in April, fewer than economists expected. It also showed the number of jobs added in March and February were revised upward and the unemployment rate fell to 8.1% as people dropped out of the labor force. Read story on jobs report.
“We’re disappointed, but not surprised,” said Paul Montaquila, head fixed-income trader at Bank of the West, which oversees $60 billion in assets. “The economy is in molasses mode. We’re just not getting anywhere.”
That shouldn’t be a surprise because Fed Chairman Ben Bernanke has alluded the problems in the labor market many times, he said.
The data “allows the Fed to remain in a wait and see mode,” he said. There’s not reason to believe the Fed will do anything like change its bond-purchase program, an option the central bank continues to leave open. See more on what Fed may do.
U.S stocks dropped more than 1%, with the Dow Jones Industrial Average DJIA -1.25% losing 143 points. Read about U.S. stocks.
As for Treasury yields, “We’re back in a trading range, but I like to think we’re near the bottom,” Montaquila said. Ten-year yields could rise back to 2.25% or so but “they can’t go higher because of the amount of bids that come in at those levels.”
“There’s a lot of money sitting in company coffers, retirement accounts and everywhere waiting for higher yields,” he said.
Also helping keep yields low is uncertainty about overseas events, slowing growth in major global economies and more immediately, important elections in Greece, France and Italy this weekend. See story on European elections.
“The world scenario doesn’t help because the slightest bit of bad news out of — pick your country — sends everybody clamoring for Treasurys,” Montaquila said.
Ten-year yields have fallen for a seventh straight week, the longest string of declines (or gains in price) since the depths of the U.S. credit crisis at the end of 2008.
Yields on 30-year bonds have declined for a fifth week, the longest run since
Five-year yields have fallen for seven straight weeks as well, their longest run since one ending in June 2011, when concerns about Greece’s finance and slowing growth were in the headlines.
Deborah Levine is a MarketWatch reporter, based in New York.
