Ten-year yields see biggest quarterly drop since last fall
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices fell on Friday as agreements at a European summit on helping banks boosted investors’ willingness to buy riskier assets.
Yields on 10-year notes 10_YEAR +5.38% , which move inversely to prices, rose 7 basis points to 1.66%.
A basis point is one one-hundredth of a percentage point.
Yields on 30-year bonds 30_YEAR +3.33% increased 8 basis points to 2.76%.
Five-year yields 5_YEAR +8.79% added 6 basis points to 0.75%.
European Union leaders meeting in Brussels agreed to establish a single supervisor for euro-zone banks and said the region’s permanent rescue fund — the European Stability Mechanism — will be able to directly recapitalize banks, defying low expectations among investors and traders. See more on EU summit outcome.
Stocks and the euro EURUSD +1.89% gained, and yields on German bunds — also seen as a safe haven — rose, noted Andrew Wilkinson, chief economic strategist at Miller Tabak. See story on euro.
“The general rise in risk appetite similarly saw investors dump U.S. Treasury notes,” he said.
Bonds showed little reaction to a U.S. report showing consumer spending was nearly unchanged in May, while an index on inflation fell, in line with expectations.
However, bond yields stayed within the relative tight range seen lately.
A week ago, 10-year notes yielded 1.67% and 30-year bond yields were at 2.76%. Five-year yields were unchanged from last Friday.
Yields on all three benchmark securities are up for the first month in three. But big declines in the prior two months leave Treasurys on pace for a good rally this quarter.
“The past quarter has been dominated by EU uncertainty which led to outsized flight to quality move into U.S. Treasurys,” said George Goncalves, bond strategist at Nomura Securities.
Ten-year yields have fallen from 2.22% at the end of March, while 30-year yields have dropped from 3.34%.
Similarly, 5-year yields have declined form 1.04% three months ago.
Deborah Levine is a MarketWatch reporter, based in New York.
