Most US Treasury debt prices ended little changed on Thursday, closing out a stellar first half of the year for US government bonds as global economic worries and negative yields in Europe and Japan helped drive demand. Treasuries have earned more than 5 percent in total returns since the end of December, nearly double the returns of the Standard & Poor's 500 index during the same period.
"There are still a lot of uncertainties that could weigh on growth. People don't think growth would pick up much," said Praveen Korapaty, head of US rates at Credit Suisse in New York. Earlier Thursday, investors scaled back safe-haven bond holdings as stock markets world-wide bounced back again after a two-day rout in reaction to Britain's vote to leave the European Union a week ago, analysts said.
The surprise Brexit outcome had intensified fears about a further slowdown in business activities across the globe, the analysts said. Bank of England Governor Mark Carney on Thursday said the BOE would probably need to inject more stimulus over the summer. His remarks sent British Gilts yields to record lows and briefly lifted Treasuries prices out of the red.
Although data on Thursday hinted at resilience in the US labour and factory sectors, investors remained worried that global risks could endanger the modest US economic expansion. "There may be more of a growth crisis than any acute financial stress" from Brexit, said Stanley Sun, interest rate strategist at Nomura Securities International in New York. Benchmark 10-year Treasury notes were down 1/32 in price, yielding 1.482 percent, which was up 0.6 basis point from Wednesday.
Shorter-dated yields slipped 2 to 4 basis points on Carney's comments and a speech by the president of the St. Louis Federal Reserve Bank, James Bullard, in which he repeated that only a single US rate hike may be needed in the foreseeable future. The 30-year bond, however, fell 10/32 in price with the yield at 2.295 percent, up 1 basis point.
Major US stock indexes rose for a third straight session with the S&P 500 up 1.2 percent. Bond purchases for portfolio rebalancing at quarter-end, together with persistent overseas demand due to nearly $12 trillion of foreign bonds with negative yields, helped limit the fall in Treasury prices, analysts said. Through Wednesday, Treasuries produced a 5.45 percent return so far this year, led by a 16.52 percent gain among issues that mature in 20 years and beyond, according to indexes compiled by Barclays.
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