US Treasuries prices rose on Monday as higher yields attracted buyers and stock market losses and political news from Europe fed a bid for safe-haven US debt. Wall Street stocks pulled back from five-year highs while benchmark Treasury yields eased back below 2 percent after climbing overnight to nine-month highs. A "2-percent (10-year yield) is a good buying opportunity for most investors." said Sharon Stark, chief fixed-income strategist at D.A. Davidson in St. Petersburg, Florida.
Through Friday, Treasuries prices suffered their second weekly decline on an improved outlook for the US economy and less anxiety about fiscal problems in Europe. But the push of the Dow Jones industrials above 14,000 for the first time since October 2007 on Friday was challenged by worries about possible political shake-ups in Europe. Spain's opposition party on Sunday called for the resignation of Prime Minister Mariano Rajoy over a corruption scandal, as Rajoy sought to pull the euro zone's fourth-biggest economy out of five years of financial woes.
The calls for Rajoy's resignation pushed Spanish 10-year bond yields to six-week highs. Rajoy denies any wrongdoing. In Italy, the increased popularity of former prime minister Silvio Berlusconi and his chances of regaining power also raised worries about Italy's struggle to fix its fiscal problems. "The primary catalyst for today's move up in US Treasuries prices was renewed concern about potential headline risk coming from the euro zone, though not to the degree we experienced last summer," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey. The rolling of put options on the iShares Barclays 20+ Year Treasury Bond fund TLT.P seen last week continued on Monday as TLT shares rose 1.35 percent to $117.11. By rolling to the March $116 strike puts from the February $120s, spread traders seemed to be expressing the view that Treasury bonds might see more losses over the next 39 days, even as the TLT sees a modest flight-to-safety bid amid renewed worries about Europe on Monday, said WhatsTrading.com options strategist Frederic Ruffy.
Benchmark 10-year US Treasury notes rose 16/32 in price to 96-31/32. Its yield eased to 1.96 percent from 2.02 percent on Friday. The 10-year yield earlier climbed to 2.059 percent, its highest since last April 12 when it touched an intraday peak of 2.065 percent, according to Reuters data.
The 30-year bond rose 29/32 in price, its yield easing to 3.16 percent from 3.22 percent at Friday's close. The yield on 10-year Italian government notes rose 15 basis points near 4.50 percent, the highest since late December, while the yield on 10-year Spanish sovereign debt jumped a quarter point to 5.44 percent.
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