US Treasury debt prices jumped on Friday, with long-term yields hitting record lows after slower-than-anticipated economic growth fuelled speculation that the Federal Reserve will delay interest rate hikes. Friday's gains added to a 2015 rally that put the 30-year Treasury on track for total returns in January of more than 10 percent.
That would be the long bond's best total return performance since September 2011, according to Bank of America Merrill Lynch data. Through Thursday, the Merrill 30-year index had gains in January of 9.19 percent, or more than three times those of the overall Treasuries market. In contrast, the Standard & Poor's 500 index has lost 1.7 percent in January.
The long bond, which was last up 2-4/32 in price and yielding 2.2301 percent, has been especially popular with overseas buyers because of America's brighter economic outlook. Its yield hit a record low of 2.225 percent late on Friday. Prices surged after the US Commerce Department said gross domestic product rose at a 2.6 percent annual pace after the third quarter's spectacular 5 percent increase. Weak business spending and a wider trade deficit offset the fastest pace of consumer spending since 2006.
The data stung Wall Street stock prices, which were off nearly 0.70 percent, but encouraged buying of Treasuries on hopes the Fed will delay an interest rate increase. The US central bank has kept its short-term rate near zero since December 2008, and most economists at firms that deal directly with the Federal Reserve expect a mid-year hike. Late on Friday, Treasury prices briefly gave up some gains as a rise in crude oil prices of 8 percent to about $52 a barrel lifted beaten down energy stocks but rose again as a late sell-off on Wall Street deepened stock losses.
Late debt trading was very heavy, especially on cash long-dated bonds that were running more twice their recent averages, according to Tradeweb. The 10-year note was last up 31/32, leaving its yield at 1.6475 percent after reaching a yield of 1.646 percent, a level not seen since May 2013.
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