US Treasury debt prices rose on Friday on safe-haven bidding and worry about the depth of the current recession, although yields remained within recent ranges in very quiet trade. The bond market was closed on Thursday for the Christmas Day holiday. Many traders also took Friday off.
"Trading is very thin, with basically every market other than the US closed today," said Kim Rupert, managing director of global fixed income analysis at Action Economics in San Francisco. Benchmark 10-year Treasury notes traded 14/32 higher in price for a yield of 2.14 percent from 2.19 percent late on Wednesday. Although the 10-year yield was on track for its biggest weekly rise since early November, the yield remains not far off a 50-year low of 2.04 percent reached last week.
Two-year notes traded 1/32 higher in price for a yield of 0.89 percent from 0.91 percent late on Wednesday. According to ICAP, Treasury trade volume was almost non-existent on Friday. "The market was open but no one showed up," said Andrew Brenner, senior vice president of MF Global in New York. Thirty-year bonds traded 20/32 higher in price for a yield of 2.61 percent from 2.63 percent late on Wednesday.
The long bond has delivered total returns of nearly 45 percent year to date and is heading for its strongest performance since 1982 as investors bet that inflation may soon turn to deflation, at least briefly, and as the economy experiences its biggest shock in at least a generation.