U.S. debt prices rise as stocks sink

By Emily Flitter

NEW YORK (BestGrowthStock) – Prices of U.S. government debt rose on Tuesday and two-year note yields touched a record low in light trading as stocks sank, dragged down by disappointing corporate results.

Earnings reports from Goldman Sachs Group Inc (GS.N: ) and Johnson & Johnson (JNJ.N: ) pushed their shares lower. Traders said they were not following earnings news for individual companies but rather the performance of major stock indexes.

In late morning trading, the benchmark 10-year Treasury note was up 7/32 in price to yield 2.94 percent, down from 2.96 percent at Monday’s close.

“It’s really equity-focused,” said Christian Cooper, senior rates trader at Jefferies & Co in New York.

Raymond Remy, head of U.S. fixed income at Daiwa Securities in New York, said the Treasury market was quiet but that there was inevitably a “knee-jerk” reaction in Treasury prices whenever stock futures moved.

Speculation the Federal Reserve could try to implement another round of quantitative easing was not driving Treasury price action on Tuesday, traders said.

Volume was 74 percent of its 10-day moving average, according to CRT Capital Group in Stamford, Connecticut.

Two-year Treasury notes were unchanged in price to yield 0.59 percent, down from 0.60 percent on Monday after briefly touching a record low of 0.5764 percent.

“It’s a very slow squeeze to lower yields because the two years kind of locked in,” said Marty Mitchell, chief market technician at Stifel Nicolaus in Baltimore. “It has little room to really run higher (in price) unless the Fed really gets serious on new easing measures. Until that happens, the front is going to have very little room to run.”

The 30-year Treasury bond gained 3/32 in price for a yield of 3.97 percent, down from 3.98 percent.

U.S. June housing starts fell 5 percent from May, but analysts said the data was not as bad as the headline suggested.

“Single-family starts held up rather well,” said Tom Porcelli, U.S. economist at RBC Capital Markets in New York. “Single family matters more from a GDP perspective. It’s more value-added. Overall, this is not as bad as the headline would suggest.

The five-year note yield fell to 1.68 percent from 1.70 percent.

Stock Market Research

(Editing by Andrew Hay)

U.S. debt prices rise as stocks sink