US Treasury prices extended their rally on Friday as more money flowed out of European bonds and equities and into safe-haven US debt, but traders said prices could fall next week ahead of scheduled auctions. The Treasury Department plans to sell $99 billion in new debt on Tuesday, Wednesday and Thursday.
Selling ahead of the auctions to lower auction prices and raise yields could overpower the safety bid, which remained strong going into the weekend. "There's so much uncertainty, even beyond Greece, in Europe that we're getting yields that are low despite the fact that we have nearly $100 billion of twos, fives and sevens to sell next week," said David Coard, head of fixed income sales and trading at Williams Capital in New York.
Two year notes continued their rally for an 11th straight week, the longest in more than 30 years, coming close during trading on Friday to a record intraday low touched on November 4, 2010 at 0.3200 percent. Two year notes closed unchanged in price from Thursday and yielding 0.346 percent. The benchmark 10-year US Treasury note rose 11/32, erasing an earlier loss. Its yield eased to 2.87 percent from 2.91 percent late on Thursday, closing at its lowest point since November 30, 2010.
In the middle of the maturity curve, the five-year note was up 11/32, its yield slipping to 1.38 percent from 1.46 percent on Thursday. The Federal Reserve bought $4.578 billion in US Treasuries with maturities ranging from April 15, 2014, to May 15, 2015. The purchases were part of the US central bank's second phase of large-scale asset purchases, known as QE2, intended to facilitate lending and encourage economic growth. US three-month bills yielded 0.015 percent and six-month bills yielded 0.071 percent.
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