| Uncertainty about the global economic recovery combined with modest stock losses fed a safety bid for U.S. government debt on Friday ahead of the Group of 20 nations summit this weekend.
A downward revision to first-quarter U.S. gross domestic product gave Treasuries a slight boost early on. The gains were erased and the market briefly turned lower before rising again when stock market losses revived the bid for U.S. debt.
The equity market's "struggle" gave safe-haven support to bonds, said John Spinello, chief fixed-income technical strategist at Jefferies & Co. in New York.
World stocks fell for the fourth session in a row as leaders of richer G20 nations gathered in Canada to try to shore up a shaky economic recovery. Widening spreads on some European sovereign debt and ongoing concerns about the U.S. economy kept Treasuries "well bid on declines," Spinello said.
Prices of U.S. government debt rose across the board after a week in which the Treasury sold a total of $108 billion in new two-, five- and seven-year notes.
Benchmark 10-year Treasuries rose 13/32, their yields easing to 3.10 percent from 3.14 percent on Thursday. Thirty-year bonds_climbed 27/32, their yields falling to 4.06 percent from 4.11 percent on Thursday.
The Thomson Reuters/University of Michigan U.S. consumer sentiment index reflected more positive sentiment at the end of June than at the end of May. It also showed consumers expect lower inflation in the future.
The consumer sentiment news momentarily let stocks shave losses which allowed Treasuries, in turn, to trim some gains.
Treasury prices have risen and yields fallen this week as investors have pulled back a bit from riskier assets based on some evidence U.S. economic growth might be slowing. U.S. home sales were markedly weak last month, according to data released this week. Data on business spending contained in the durable goods orders report, however, looked more robust.
That concern is coupled with worries spending cuts and tax increases in European countries to address balance sheet issues could lead to the economy slowing in Europe.
G8 leaders meeting on Friday in Canada -- and the broader G20 group on Saturday -- will debate this issue with Washington warning against cutting too far and too fast.
"The European austerity mantra will be an ongoing positive for fixed-income," Spinello said.
Spinello pointed to resistance at 3.10 percent to 3.06 percent as an area that would prompt selling of 10-year notes.
Support in a correction would lie at 3.16 percent to 3.185 percent on the 10-year yield, he said. |
