* Safety bid lifts U.S. Treasuries prices
* 10-yr yields may fall to 2.45 pct if conflict continues
* Fed bought $2.63 bln of debt maturing 2022 to 2023
By Marina Lopes and Karen Brettell
NEW YORK, March 3 U.S. Treasury debt prices rose
on Monday as Russia's military intervention in Ukraine boosted
demand for safe-haven investments like U.S. government debt,
pushing yields down to their lowest in almost a month.
Russia took a financial hit over its military intervention
in neighboring Ukraine, with its stocks, bonds and currency
plunging as President Vladimir Putin's forces tightened their
grip on the Russian-speaking Crimea region.
Tension in the region drove Treasury volume up overnight and
sent 10-year yields to 2.5920 percent, the lowest since Feb. 4.
If the conflict continues unabated, yields could fall to
2.45 percent, traders said.
"There are bigger ramifications if this doesn't seem like it
is something that will get resolved any time soon," said Matt
Duch, a portfolio manager with Calvert Investments in Bethesda,
"Given the volatility we saw in emerging markets, it could
push investors to the sidelines," said Duch.
Volatility in emerging markets and disappointing economic
data has already pushed yields lower than what some traders and
analysts consider as fair value.
"There's a lot priced in already. Even though the data
hasn't been as strong as people hoped, it's still not nearly as
poor to justify 2.60 percent on 10-year yields," said Aaron
Kohli, an interest rate strategist at BNP Paribas in New York.
BNP sees 10-year note yields as fairly valued at between 3
percent and 3.25 percent, though Kohli noted that yields could
fall further from current levels if there is an escalation in
the Ukrainian conflict or new weakening in the U.S. economy.
"A lot of what we're seeing right now might have been
started by an emerging market blowup in Asia, but certainly the
Ukrainian situation has added to the concerns and it's been
mostly responsible for the move from around 2.75 percent to
around 2.60 percent," Kohli said.
Ten-year notes were up 15/32 in price, sending
yields down to 2.607 percent, from Friday's close of 2.66
percent. Thirty-year bonds rose 20/32 in price,
pushing yields down to 3.560 percent from Friday's close of
Prices temporarily pared gains after U.S. manufacturing
growth rebounded in February, coming off an eight-month low,
helped by a recovery in new orders. U.S.
consumer spending also rose more than expected in January,
likely as chilly weather boosted demand for
The Federal Reserve bought $2.63 billion in debt maturing
between 2022 and 2023 as part of its continued bond buying
Traders await nonfarm payrolls data, due out on Friday, for
a clearer picture on the health of the U.S. economy.