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Tuesday, November 1, 2011

10-year benchmark Treasury yield dips 1 november 2011

10-year benchmark Treasury yield dips 1 november 2011 : Investors scrambled into major government bond markets in the U.S., Germany and the U.K. Tuesday as the latest drama from Greece threatened to derail the international efforts to stem the euro zone's sovereign debt crisis. The rally in Treasury bonds sent the benchmark 10-year note's yield dipping below 2% for the first time in nearly a month. Yields in 10-year German bunds and U.K. gilts also dropped sharply.

After a bruising October, Treasury bonds have won back some love from investors as skepticism has replaced euphoria on the comprehensive deal set forth by European leaders last week to recapitalize banks, reduce Greece's debt burden and strengthen the firepower of the region's bailout fund.

The 10-year note's price has rallied for a third-straight session and the yield, which moves inversely to its price, has tumbled after hitting an 11-week peak of 2.42% Friday.

"Uncertainty is starting to find its way back into the market," said Sean Simko, fund manager at SEI Investments. "The Treasury market is the current recipient of the move catching a flight to quality bid."

In recent trading, the 10-year note was 1 24/32 higher, sending the yield down by 20 basis points to 1.973%. The 30-year bond was 4 27/32 higher to yield 2.973%. The two-year note was 2/32 higher to yield 0.230%.

The 10-year German bund's yield fell 27 basis points to 1.751%. The 10-year U.K. gilt yield dropped 25 basis points to 2.031%.

The surprising call by Greek Prime Minister George Papandreou late Monday about a referendum on the latest bailout deal sent shockwaves through the global financial markets.

Investors are on edge on Papandreou's new gamble, which has hung his government's future in balance. A "yes" vote may help him press ahead with deeper fiscal austerity and deflate public revolt. But what markets are worried about is a "no" vote that would send Greece into a disorderly default and touch off a new round of financial crisis.

"All bets are off on Greece. It is a bad situation," said Rick Klingman, managing director of Treasury trading at BNP Paribas in New York.

Klingman said Treasury yields will fall further should risk aversion continue to rise and U.S. stocks continue to sell off.

The latest J.P. Morgan Treasury client survey showed 23% of global investors polled said they are long Treasury bonds, the highest since February and up from 15% a week ago. Six percent said they are short, down from 11% a week earlier. That results in the most net long since Dec. 6.

A long position is a bet that Treasury prices will rise. A short is a wager that bond prices will fall. A majority of the investors are still indecisive--72% saying they are neutral, down from 74% a week ago. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today

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