Treasurys rise as Greece edges toward euro exit

AP News
Posted: May 14, 2012 5:23 PM
Treasurys rise as Greece edges toward euro exit

Treasury prices rose Monday, pushing the yield on the 10-year note down to its lowest level this year, as Greece edged closer to exiting the euro currency union.

Greek political parties were deadlocked more than a week after elections in which voters rejected politicians responsible for imposing deep spending cuts demanded by Greece's lenders. Greece needs the bailouts to stay afloat, but the spending cuts have drawn violent opposition from voters.

Another round of elections in Greece appears likely. If the nation remains unable to elect a group who can agree with international lenders, Greece may be forced to leave the currency union, potentially roiling global financial markets.

The uncertainly led traders to dump the debt of European governments that are also considered shaky, push down stock prices around the globe and load up on Treasury securities, which are seen as far less risky.

The yield on the 10-year Treasury note fell to 1.78 percent in late trading, down from 1.85 percent late Friday. Rising demand for bonds pushes their yields lower. Earlier Monday the yield went as low as 1.77 percent, the lowest since October. The price of the note rose 63 cents per $100 invested.

In other trading, the yield on the 30-year bond fell to 2.94 percent from 3.02 percent late Friday. Its price rose $1.44 per $100.

The yield on the two-year Treasury note edged up to 0.27 percent from 0.26 percent. The yield on the three-month T-bill held steady at 0.09 percent.

In Europe, borrowing costs for Spain and Italy rose sharply as investors sold bonds issued by those governments in anticipation that they too would have trouble meeting their obligations. The yield on the 10-year Italian government bond rose a quarter of a percentage point, a large move, to 5.69 percent; Spain's jumped to 6.21 percent. Greece had to seek relief from its lenders when its borrowing rates spiked to 7 percent.