Treasurys rise on worries over Europe

AP News
Posted: Aug 16, 2011 5:49 PM
Treasurys rise on worries over Europe

Worries over Europe's ongoing debt crisis pushed U.S. government bond prices higher Tuesday.

News that Germany's economic growth nearly stalled helped lift Treasury prices, as traders moved money into assets considered safe. The 10-year Treasury note rose 75 cents for every $100 invested. The higher price knocked the yield down to 2.23 percent from 2.31 percent late Monday.

Germany's statistical agency said Tuesday the country's economy grew just 0.1 percent in the second quarter. A slowdown in Germany, Europe's largest economy, could complicate efforts to fix the continent's debt crisis. Germany and France have played lead roles in bankrolling rescue loans to Greece and other European countries struggling to pay their debts.

Interest rates sank across the Treasury market. The yield on the two-year Treasury fell to 0.19 percent from 0.20 percent. The 30-year yield dropped to 3.67 percent from 3.77 percent. Its price rose $1.87.

After meeting in Paris Tuesday, French President Nicolas Sarkozy and German Chancellor Angela Merkel called on countries that use the euro currency to strengthen their economic ties. Bond traders had been looking for larger steps. Some experts have called for the creation of bonds backed by all 17 countries that use the euro, which could help struggling countries borrow at lower interest rates.

In the market for short-term Treasury bills, the three-month T-bill paid a 0.01 yield. Its discount was 0.01 percent.