LONDON, Feb 15 U.S. Treasuries firmed in Europe
on Friday after strong demand at a 30-year bond auction and
renewed concerns about the weakness of the euro zone economy
increased demand for low-risk assets.
The U.S. government sold $16 billion of 30-year bonds at a
high yield of 3.180 percent on Thursday, drawing solid demand
and sparking a rally in U.S. paper. The auction wraps up a busy
week in terms of supply, with debt sales totalling $72 billion.
Ultra-long bonds outperformed the rest of the curve on
Friday, with the 30-year yield dropping 2.7 basis
points to 3.1509 percent, while the benchmark 10-year T-note
yield dipped 1.4 bps to 1.9844 percent.
T-note yields hit 10-month highs of 2.062 percent earlier
"Supply was a concern this week, but now that it is behind
us, bonds look in pretty okay shape," said Craig Collins, a
trader at Bank of Montreal.
He expected yields to continue falling near-term towards
1.9250, around February's lows.
Traders said data showing the euro zone economy sliding
further than expected into recession was also giving Treasuries
Worries about the region's economy may increase if the euro
currency continues to appreciate, hurting exporters'
Talk of "currency wars" will feature high on the agenda of a
Group of 20 meeting in Moscow. Hosts Russia say the G20 will
back the thrust of a G7 text, which reaffirmed a commitment to
floating exchange rates.