TREASURIES-Prices rise as investors seek safety bids

* Prices up narrowly as stocks reverse sharp drop

* 30-year bond yield briefly dipped below 4 percent

By Ellen Freilich

NEW YORK, May 21 (BestGrowthStock) – U.S. Treasuries prices rose on
Friday, briefly pushing the 30-year bond yield below 4 percent,
as fear that global fiscal tightening would kill the recovery
encouraged investors to buy safe-haven U.S. government debt.

Stocks resumed their slide, fresh from a 376-point drop on
Thursday in the blue-chip Dow Jones industrial average.

“The growth trade is being unwound,” said Thomas di Galoma,
head of fixed-income rates trading at Guggenheim Securities in
New York. “The Treasuries market is in a ‘panic buy stage’ as
it looks like a meltdown in equities.”

The price on benchmark 10-year notes (US10YT=RR: ) rose 17/32
of a point. Its yield, which moves inversely to price, eased to
3.15 percent from 3.21 percent on Thursday.

The flight to safety has put Treasuries at the “bull
extreme,” said John Spinello, chief fixed-income technical
strategist at Jefferies & Co in New York.

That could lead to “erratic trade” with resistance on the
10-year yield now lying at 3.17 percent to 3.15 percent and
support during any correction placed at 3.23 percent to 3.15
percent, he said.

RBS analysts said intermediate-term momentum remains
bullish for Treasuries, but said that the market “continues to
be highly correlated with movements of risk assets.”

The fear trade briefly pushed the 30-year bond yield below
4 percent. Resistance for the 30-year bond yield below 4
percent lies at 3.95 percent, according to RBS analysts.

On Thursday, Bill Gross, manager of the world’s biggest
bond fund, Newport Beach-Calif.-based Pimco, told Reuters that
fiscal tightening from Japan, the euro zone, and the United
States will lead to slower growth and lower inflation,

As investors took all these factors into account, the
30-year bond (US30YT=RR: ) rose 29/32, its yield falling to 4.04
percent after falling below 4 percent in early dealings.

Two-year notes (US2YT=RR: ) were unchanged, their yields at
0.72 percent.

Five-year notes (US5YT=RR: ) rose 3/32, their yields easing
to 1.95 percent from 1.99 percent on Thursday.

Stock Market Money

(Editing by Padraic Cassidy)

TREASURIES-Prices rise as investors seek safety bids