MW: Treasurys gain as Spain, Greece worries resume
By Deborah Levine, MarketWatch
SAN FRANCISCO (MarketWatch) — Treasury prices rose on Monday, pushing yields down, as reports about Greece’s budget deficit being larger than officials are saying and nervousness about Spain’s finances sent investors back toward the relative safe haven of U.S. bonds.
“The bullish sentiment in rates has been attributed to renewed concerns about the viability of the European rescue scheme,” said bonds strategists at CRT Capital Group. “While this weekend offered no concrete developments out of the region, public disagreement among European policy markers has been the focus.”
Disagreements between Germany and France about a European banking authority were also talked about. Read: Bloomberg editorial says Europe needs a banking union.
Analysts have noted that developments in Greece don’t really matter financially — it’s a small economy and has already defaulted so most of its debt is now in the hands of official institutions like the International Monetary Fund. Read: Der Spiegel says Greece’s budget shortfall nearly double estimates.
However, it matters a lot for investors’ psychology and confidence because it indicates even a couple of years after big bailouts, problems keep arising, which raises worries that may happen to other countries headed toward a bailout — Spain and Italy. And those are much bigger economies — and size matters.
Yields on 10-year notes 10_YEAR -2.17% , which move inversely to prices, fell 4 basis points to 1.71%. A basis point is one one-hundredth of a percentage point.
