* China's 1st-quarter GDP below expectations
* Spanish, Italian debt yields rise
* March US growth rises modestly, near expectations
By Emily Flitter
NEW YORK, April 13 U.S. Treasury debt prices
rose on Friday, pushing benchmark yields below the key
psychological level of 2 percent, as falling stocks and worries
over global economic growth fueled appetite for lower-risk
Traders eased back into defensive positions after data on
the Chinese economy and rising debt yields in Europe rekindled
worries that the world's economic and financial problems weren't
"The European debt crisis and the China slowdown, those
things have developed a healthy flight-to-safety bid," said
David Coard, head of fixed-income sales and trading at The
Williams Capital Group in New York
Investors were reluctant to go into the weekend underweight
on safe-haven U.S. debt, said Chris Ahrens, interest-rate
strategist at UBS Securities in Stamford, Connecticut.
"The auctions came, the auctions went, supply got
underwritten again, people wish they'd held on to their bonds a
little bit longer. There's an apprehension out there given
what's happening in Europe," he said, referring to the
government's successful sales of $66 billion in three-year and
10-year notes and 30-year bonds over a three-day period this
"Forward looking, we are all curious to see how the weekly
initial jobless claims numbers respond over the next week or
two," Ahrens said.
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.
Benchmark 10-year Treasury notes were trading
18/32 higher in price to yield 1.99 percent, down from 2.06
percent late Thursday and off from 2.05 percent late last week.
The dip in yields takes them closer to the September level
of 1.67 percent which was the lowest in at least 60 years.
"The worry for the market this week remains Spanish debt
yields which have somehow started 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 bought $1.833 billion of
Treasuries maturing February 2036 through August 2041 as part of
its latest stimulus program, which has been nicknamed "Operation
Data showing U.S. consumer prices rose modestly in March,
largely in line with expectations, had little impact on the
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.
Thirty-year bonds were trading 1-11/32 higher in
price to yield 3.14 percent from 3.21 percent late Thursday.