Bond prices edges up on worries over Greece's debt

AP News
Posted: May 20, 2011 5:23 PM
Bond prices edges up on worries over Greece's debt

Treasury prices rose Friday as Greece's deepening debt crisis led investors to seek out safer assets.

Growing concerns that the economic recovery is slowing in the U.S. also helped lift Treasurys.

The price of the 10-year Treasury note rose 18.75 cents per $100 invested in late trading. Its yield, which moves in the opposite direction, fell to 3.15 percent from 3.17 percent late Thursday.

Fitch Ratings cut Greece's credit by three notches further into junk status . The country's borrowing rates spiked to new highs on the news. Rates on the nation's 10-year bonds hovered around 17 percent, a sign that investors believe Greece might not repay its debt.

Greece has stayed afloat for the past year because of a 110 billion euro rescue package provided the International Monetary Fund and other countries that use the euro. As part of the bailout deal, Greece has implemented strict austerity measures.

Closer to home, traders worried that lagging sales at Gap Inc. could indicate that consumers' appetite for spending is waning. The retailer, along with clothing chain Aeropostale, cut its earnings forecast for the year, partly due to higher raw materials costs.

Investors tend to buy Treasurys when the economy appears softer.

In other trading, the price of the 30-year Treasury bond edged up 6 cents per $100 invested, while its yield was unchanged at 4.30 percent. The yield on the two-year note slipped to 0.52 percent from 0.53 percent.

The yield on the three-month T-bill was unchanged at 0.04 percent. Its discount was 0.05 percent.