Treasuries got a lift today as investors, quaking from the latest round of profit warnings, picked bonds over stocks.
The two-year Treasury note recently gained 3/32 to 99 20/32, lowering the yield to 4.066%. Yields move inversely to prices. On the long end of the market, the 10-year benchmark note rose 8/32 to 97 25/32, yielding 5.296%, while the 30-year Treasury bond climbed 5/32 to 95 21/32, dropping the yield to 5.679%.
With little economic news to spur trading this week, dealers said the bond market benefited from the recent selling in the stock market. "The number one factor is the stock market. The bids started happening when the European markets reversed this morning," said Mike McGlone, vice president at
Aubrey G. Lanston
. "It's also a quiet summer market. Quiet markets have a tendency to trade better."
Bonds are fixed-income securities that are less volatile than equities. They're often seen as safe havens for stock-fleeing investors, and the major market averages traded lower today. "Unless there's a substantial rally in the stock market, which I don't expect, I believe there'll be a clamor for yields," said McGlone, "Treasuries are offering very attractive yields right now."
This Friday, investors will be reading the tea leaves from the economic reports, which include the
producer price index, June's
retail sales and the latest
consumer sentiment index.
"The bond market's already pricing in good data," said McGlone. "I expect the inflation data to continue to come in better than expected. The number one factor for the bond market is inflation expectations, and if the numbers come up better than expected, I expect the bond market to rally."