TREASURIES-Global growth concerns push yields down

Fri Apr 13, 2012 10:29am EDT

Related Topics

* China's 1st-quarter GDP below expectations
    * Spanish, Italian debt yields rise
    * March US growth rises modestly, near expectations


    By Chris Reese	
    NEW YORK, April 13 (Reuters) - U.S. Treasury debt prices
rose on Friday, pushing benchmark yields below 2 percent, as
falling stocks and worries over global economic growth fueled
appetite for lower-risk assets.	
    Treasuries started the day higher as below-forecast Chinese
output data dented risk appetite, and debt prices also benefited
from a flight into more secure assets caused by nervousness over
the persistent euro zone debt crisis.	
    Data showed China's gross domestic product expanded by 8.1
percent in the first quarter, the weakest pace in nearly three
years and below an 8.3 percent forecast. 	
    Worries over the European debt crisis also pushed Spanish
and Italian debt yields higher, with the cost of insuring
Spain's debt hitting an all-time high. 	
    "Treasuries have once again found their footing after
China's gross domestic product weakened more than expected,
while Spain's 10-year yields jump back above 5.9 percent this
morning," said William O'Donnell, head of U.S. Treasury strategy
at RBS Securities in Stamford, Connecticut.	
    Benchmark 10-year Treasury notes were trading
18/32 higher in price to yield 1.993 percent, down from 2.06
percent late Thursday. Thirty-year bonds were
1-11/32 higher in price to yield 3.14 percent from 3.21 percent.	
    "The worry for the market this week remains Spanish debt
yields which have somehow starting moving on whether the risk
trade is on, or mostly off, ... or the fact that China's GDP is
not the 9 percent whisper number but only 8.1 percent last
night," said Chris Rupkey, chief financial economist at Bank of
Tokyo-Mitsubishi UFJ in New York.	
    The U.S. Federal Reserve on Friday was buying $1.5 billion
to $2 billion of Treasuries maturing February 2036 through
February 2042 as part of its latest stimulus program, which has
been nicknamed "Operation Twist".	
    Data showing U.S. consumer prices rose modestly in March,
largely in line with expectations, had little impact on the
Treasuries buying. 	
    The bullish tone was supported however by the Thomson
Reuters/University of Michigan's preliminary reading on consumer
sentiment for April, which dipped to 75.7 from 76.2 in March.
Economists had expected the index to hold at last month's level.
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