Bond yields hit '11 lows as Greece turmoil deepens

AP News
Posted: Jun 16, 2011 5:35 PM
Bond yields hit '11 lows as Greece turmoil deepens

Yields on U.S. government bonds reached 2011 lows as investors poured money into less risky investments. Greece's deepening political turmoil is causing fears that the country could default on its debt, causing widespread disruptions in global financial markets.

The yield on the two-year Treasury note went as low as 0.33 percent Thursday, and the yield on the 10-year note went as low as 2.88 percent. Both were lows for the year.

Bond yields fall and their prices rise when demand for lower-risk investments increases.

The price of the 10-year Treasury note rose 40.62 cents for every $100 invested late Thursday. The dip in price pushed the yield down to 2.92 percent from 2.97 percent late Wednesday.

Greek Prime Minister George Papandreou is facing down a party revolt over austerity measures demanded by international lenders. If the measures fail and Greece defaults, it could undermine confidence in the debt of other European countries and send the value of the euro currency plunging.

"With Greece, the problem seems to be compounding," said Kim Rupert, managing director of fixed income at Action Economics. "Also, U.S. economic activity has been slowing down in the first half of the year."

A series of weak manufacturing reports and also other economic indicators has led analysts to trim their expectations for the pace of the economic recovery this year.

The 30-year bond rose 40.62 cents, sending its yield down to 4.17 percent from 4.20 percent. The yield on the two-year Treasury note was unchanged from late Wednesday at 0.38 percent.

The three-month Treasury bill paid a yield of 0.03 percent, at a discount of 0.04 percent.