US Treasury debt prices fell on Wednesday, with the 30-year yield flirting with all-time lows, as investors reduced bond holdings on a further rebound in stocks and commodities following a rout triggered by Britain's vote to leave the European Union.
The Standard & Poor's 500 index rose for a second straight day, retracing more than half its losses after a two-day global equity sell-off that wiped out $3 trillion in value. "The market is taking a break from the Brexit volatility," said Eric Stein, co-director of the global income group at Eaton Vance in Boston. Benchmark 10-year Treasuries were down 12/32 in price with a yield of 1.495 percent, up 3 basis points.
Despite Wednesday's modest pullback, demand for Treasuries and other low-risk government debt will remain supported by worries about sluggish global growth and bets on the Federal Reserve keeping rates on hold, analysts said. Treasuries especially appeal to European and Japanese investors who face negative yields at home. The safe-haven buying in reaction to the Brexit outcome increased the global total of sovereign debt with negative yields to $11.7 trillion as of Monday, up $1.3 trillion from the end of May, Fitch Ratings said on Wednesday.
Possible repercussions from Britain's exit from the European economic bloc have led some traders to think the Federal Reserve would not raise interest rates in 2016. Strong demand for 30-year Treasury bonds initially pushed their yield to 2.247 percent early Wednesday, which was several basis points shy of all-time low of 2.221 percent struck on January 30, Reuters data showed. Buying in 30-year bonds faded as gains in Wall Street stocks accelerated in late trading. The 30-year yield was last 2.307 percent, up three basis points from Tuesday.
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