Bonds News

TREASURIES-Bonds rally on security fears

(Updates prices, adds quote)

NEW YORK, July 2 (Reuters) - U.S. Treasuries rose on Monday, sending 10-year yields below five percent for the first time since early June, as global bonds rallied on recent security worries and shrugged off strong U.S. factory data.

Traders said attempted car-bomb attacks in London on Friday, Saturday’s attack on Glasgow’s airport in Scotland, and the killing of seven Spanish tourists and two Yemenis in a blast in Yemen kept a constant bid in the Treasury market.

A BBC television report that Britain’s Stansted airport, near London, was on alert after a suspicious package had been found, gave bonds their latest boost.

“Some people are talking about Stansted Airport in London being closed because of a suspicious package,” said Michael Cheah, vice president, portfolio manager, at AIG SunAmerica Asset Management in Jersey City.

Treasuries were not alone in their gains but the latest dip in yields below 5 percent added momentum. Euro zone and British government bonds also had a strong day.

“The European (government bond) market has had an unbelievable bid all day and that has to be terror related,” said Tom Tucci, head Treasuries trader at RBC Capital Markets in New York.

Benchmark 10-year notes US10YT=RR were up 8/32 in price, pushing their yields down to 4.99 percent from 5.03 percent on Friday.

Earlier, the Institute for Supply Management’s manufacturing gauge unexpectedly rose to a 14-month high, giving bonds a brief knock lower as it provided fresh evidence that the factory sector was weathering a persistent slump in housing.