US Treasuries mostly fell tiday as the ever-worsening credit crisis had investors selling out of even lower-risk government debt in a mad scramble to turn any investment into cash.
US stocks plunged on opening today, following an equities rout yesterday and then a global stocks tailspin overnight.
Normally, stocks weakness would spur buying into safer-haven government debt, but analysts said the outlook has become so dire that investors were selling anything they can, including Treasuries, to get their hands on cash.
Only short-term Treasury bills, which are considered pretty much a cash equivalent, were able to catch a bit of a bid.
The benchmark 10-year US Treasury note was trading 26/32 lower in price for a yield of 3.88 per cent from 3.78 per cent late yesterday, while the 2-year Treasury note was 7/32 lower for a yield of 1.65 per cent from 1.53 per cent.
The only buying of debt was on the very short end of the Treasury curve, where 1-month T-bill yields were trading all the way down near 0.07 per cent.
Some of the weakness in bonds was due to fact that government debt was one of the few places left where investors could take profits, analysts said. While Treasuries have sold off strongly this week, yields remain near the lowest in over five years after being pushed down for months by safe-haven buying. Bond yields move inversely to prices.
The market largely glossed over data today morning showing US import prices had the largest one-month decline in five years in September, while export prices declined for the second month in a row. Data also showed the US trade gap narrowed in August.
The Securities Industry and Financial Markets Association is recommending an early bond market close at 2pm (1800 GMT) today ahead of Monday's Columbus Day holiday.
Reuters