The US government debt market rallied on Thursday, sending the two-year note yield at record low, as recession fears hammered global stock markets and spurred safety bids for bonds and cash. The benchmark 10-year Treasury yield fell to its lowest in nearly 5-1/2 years after a jump in weekly jobless claims fanned anxiety about a steep, prolonged economic downturn and pushed major stock indexes down one percent in early trading.
Weekly jobless claims climbed to a 16-year high last week, while continued claims broke above the four million mark in the week ended November 8 to their highest since December 1982, the government said on Thursday. The demand for Treasuries was intense across all maturities with pronounced buying in the long end, as insurers and pension funds sought to lock in assets that earn stable, long-term income so they can meet future payouts, analysts said.
The 30-year Treasury bond surged more than three points with its yield dropping to 3.74 percent, a level not seen since the early 1960s, according to Reuters data. In other data, the Philadelphia Federal Reserve will release its monthly business activity index in the Mid-Atlantic region at 10 am (1500 GMT). The median forecast among analysts polled by Reuters was minus 35.00 in November, compared with an 18-year low of minus 37.50 in October.
On the supply front, the US Treasury Department will announce at 11 am (1600 GMT) the amounts of two-year and five-year notes it will auction next week. The price on two-year US government notes was up 4/32. Its yield, which moves inversely to price, was one percent, a record low, compared with 1.07 percent late on Wednesday. Benchmark 10-year notes traded up 1-8/32 with the yield falling to 3.19 percent from 3.34 late on Wednesday.
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