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TREASURIES-U.S. yields fall on strong Bunds, 30-year bond sale
August 14, 2014 / 7:35 PM / 3 years ago

TREASURIES-U.S. yields fall on strong Bunds, 30-year bond sale

* Weak euro zone data push 10-year Bunds yield below 1 pct
    * U.S. sells 30-year supply at lowest yield in 15 months
    * Eyes on Russia convoy to Ukraine, talks to end war in Gaza
    * U.S. jobless claims rise above 300,000 in latest week

 (Adds news quotes and market action)
    By Richard Leong
    NEW YORK, Aug 14 (Reuters) - U.S. Treasuries yields fell on
Thursday on strong demand for 30-year bond supply and an
increased appeal of U.S. debt as disappointing euro zone
economic data sent 10-year German yields to record lows.
    U.S. yields rose in Asian trading before falling with their
German counterparts in reaction to data that showed euro zone
growth unexpectedly flatlined in the second quarter and
inflation figures that confirmed anemic price growth in the
18-nation block.  
    Fears about Russia's aid convoy to eastern Ukraine, which
Kiev and the West reckon could be a pretext for an invasion,
intensified demand for lower-risk U.S. and German government
debt, helping to push 10-year Bund yield below 1
percent for the first time ever.  
    Conflicts in Ukraine, Middle East and Iraq "have had a
substantial impact on global yields," said Jennifer Vail, head
of fixed income research at U.S. Bank Wealth Management in
Portland, Oregon. "Yields will remain depressed on geopolitical
risks."
    Benchmark 10-year Treasuries yield fell 3 basis
points to 2.400  percent, which was about 5 basis points above
the 14-month low set last week.
    The 30-year bond was the strongest maturity as
its yield falling almost 5 basis points to 3.193 percent for a
total return of 0.99 percent on the day.
    U.S. yields also declined on news domestic jobless claims
rose more than expected to 311,000 last week although the spike
did not alter the view of an improving jobs market.
 
    "Our economic cycle is very different from where the
Europeans are," said Barry HoAire, portfolio manager at Bel Air
Investment Advisors in Los Angeles.
  
    The fall in U.S. yields was limited earlier Thursday by
investors selling their Treasuries holdings to make room for $16
billion in 30-year bonds, the last leg of this week's $67
billion quarterly refunding. 
    The yield decline accelerated following the 30-year auction
that fetched a yield of 3.224 percent, the lowest in 15 months,
owing to strong demand from investors. 
    While tension in Ukraine and Iraq remained high, there was a
glimmer of hope for Israel where a 72-hour ceasefire was
extended in a bid to buy time for the Israelis and Palestinians
to reach a deal to end a one-month war in Gaza. 
    These conflicts have worried investors since they might
worsen and take a toll on the global economy.
    Before the 30-year auction, the Federal Reserve bought $1.79
billion in Treasuries due 2019 to 2020, the latest for its bond
purchase program that is expected to wind down in October. 
  

 (Reporting by Richard Leong; Editing by Meredith Mazzilli and
Tom Brown)

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