LONDON Nov 9 Prices for U.S. Treasuries rose on
Friday, extending this week's gains as concern over a looming
fiscal crisis and the euro zone's debt problems spurred demand
for safe-haven bonds.
* Treasuries have rallied following President Barack Obama's
re-election this week as market focus turns to the country's
looming "fiscal cliff". Investors fear the White House and the
Republican-dominated Congress will not be able to mitigate the
potential damage of a $600 billion package of automatic tax
hikes and spending cuts due to take effect early next year.
* U.S. T-note futures were last up 9/32 at 134-4/32
while benchmark 10-year yields were down 3 basis
points at 1.59 percent.
* The 10-year yield is down about 10 bps for the week on the
renewed flight to quality, helped too by uncertainty over when
international lenders might decide to release the next tranche
of aid to Greece to enable it to avert bankruptcy.
* "Weaker equities, wider (euro zone) peripherals (bond
yield spreads) and the poor outlook for Europe and the fiscal
cliff concerns are all helping out the Treasury market rally," a
* "Everyone's mind is focused on the outlook on the fiscal
cliff ... and in the absence of any resolution the market is
going to rally. We're watching the 1.55 percent level in 10s and
if we get to that, we set ourselves up for 1.50."
* The 10-year yield dropped below 1.5 percent earlier this
year, but only briefly. It poked below that threshold in early
June and again in July and August, hitting a record low of near
1.38 percent in late July, when worries about the euro zone's
debt crisis intensified.
* Satoshi Okagawa, senior global markets analyst for
Sumitomo Mitsui Banking Corporation in Singapore, said levels
around 1.50 percent would seem pretty low when taking into
account the U.S. economy's potential growth rate.
* The 30-year T-bond yielded 2.73 percent, 4.4
bps lower than in late New York levels. The renewed safety bid
saw strong demand at a sale of 30-year bonds on Thursday, the
final refunding auction of the week.