Treasury yields fall to three month lows on Japan

AP News
Posted: Mar 16, 2011 5:29 PM
Treasury yields fall to three month lows on Japan

Yields on U.S. Treasurys fell to three-month lows Wednesday as investors fled to the safety of bonds on fears that a nuclear reactor in Japan may be in the midst of a partial meltdown.

Treasury prices shot up after comments by a European Union official that Japan's nuclear crisis could get worse. The volatility in the bond markets also delayed the New York Federal Reserve's purchase of Treasurys by an hour.

The price on the 10-year bond rose 90.6 cents for every $100 invested, sending the yield down to 3.20 percent, from 3.32 percent late Tuesday. The yield on the 10-year note dipped as low as 3.15 percent in late morning trading, the lowest since Dec. 7, then recovered.

U.S. stock indexes also fell for a third day, losing 2 percent Wednesday, giving up nearly all of their gains for the year.

The Federal Reserve Bank of New York bought $6.58 billion in Treasury debt as part of the U.S. central bank's effort to stimulate the economy. The New York Fed released a statement saying that the transaction was pushed back by about an hour from just after 11 a.m. "due to the market's volatility."

Prices had spiked earlier in the day after reports that Guenther Oettinger, the European Union's energy commissioner, told a parliamentary committee that further catastrophic events could pose a threat to Japan.

The 30-year bond rose $1.25. Its yield fell to 4.38 percent from 4.47 percent. The yield on the two-year note dropped to 0.55 percent from 0.61 percent.

The yield on the 3-month bill was 0.08 percent. Its discount rate was 0.09 percent.