Treasury yields hit '12 highs on Greek deal hopes

AP News
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Posted: Jan 23, 2012 3:58 PM
Treasury yields hit '12 highs on Greek deal hopes

Treasury yields reached their highest levels since November on Monday as traders monitored talks aimed at averting a financial catastrophe in Greece.

Greece is asking private bondholders to reduce its debt so it can avoid defaulting on its obligations. A default by Greece threatens to spook investors in other heavily indebted nations such as Portugal and Italy. The resulting panic could cause a worldwide financial crisis.

Hopes for a deal between Greece and its lenders increased over the weekend and early Monday. Traders shed ultra-safe Treasurys in favor of higher-risk investments such as European government bonds and stocks. European stocks closed higher, and the euro rose to a three-week high against the dollar.

Falling demand for Treasurys pushed the yield on the 10-year Treasury note as high as 2.10 percent early Monday, from 2.03 percent late Friday. The 10-year yield hasn't settled above 2.10 since Oct. 31.

A bond's yield rises as its price falls. That means traders are demanding a slightly bigger return in exchange for holding a low-risk investment whose upside is limited.

Yields edged lower in daytime trading after declining U.S. stock prices pushed cash back into lower-risk Treasurys. Still, the 10-year yield remained above its trading range from the past six weeks.

The yield on the 10-year Treasury note rose to 2.07 percent as of 3:40 p.m. Monday. Its price fell 34 cents for every $100 invested.

The yield on the 30-year Treasury bond rose to 3.15 percent from 3.11 percent late Friday. Its price fell 69 cents per $100 invested.

The yield on the two-year Treasury note rose to 0.25 percent from 0.24 percent late Friday.

The three-month Treasury bill's yield fell to 0.04 percent from 0.05 percent late Friday.