US government bonds edged higher on Monday, after a brief nod toward profit-taking, as worries that the eurozone's debt crisis would jeopardise growth on that continent encouraged investors to hold on to safe-haven Treasuries. The modest buying followed Friday's rally which occurred despite a solid rise in April US retail sales as investors focused instead on the slumping euro, which fell to an 18-month low against the dollar, under $1.24.
After rising nearly a point on Friday, the benchmark 10-year note rose 3/32 on Monday, its yield easing to 3.44 percent. Two-year notes were unchanged in price, yielding 0.78 percent. A downturn in stock index futures and data showing that manufacturing activity in New York State grew at a slower pace than expected in May also supported the bid for Treasuries.
The New York Fed's "Empire State" general business conditions index declined to 19.11 in May from 31.86 in April. Ten-year notes rallied overnight in Asia, sending yields as low as 3.38 percent as the Euro sold off, said Thomas di Galoma, head of fixed-income rates trading at Guggenheim Securities in New York.
Bond investors have paid close attention to the euro in recent weeks amid weakened confidence in Europe's 11-year-old experiment with a single currency. Resistance lies at 3.42 percent to 3.38 percent on the 10-year yield and support lies at 3.49 percent to 3.515 percent, "a familiar zone from last week's trading." Five-year notes rose 2/32 in price after rising 14/32 on Friday, their yields easing to 2.15 percent from Friday's close of 2.13 percent. The 30-year bond was up 7/32, its yield easing to 4.33 percent.
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