Tags: US | Credit | Markets

Interest Rates Fall as Investors Seek Safety

Thursday, 22 Apr 2010 07:01 AM

Interest rates fell in the bond market Wednesday as investors moved out of stocks and into safe government-backed bonds.

Stock prices were mixed even as companies reported more strong first-quarter earnings. Analysts say investors have already priced in big profit gains. The Dow Jones industrials rose about 8 points.

Investors also sought safety in U.S. Treasurys after Greece's borrowing costs skyrocketed to record highs. European officials began crucial talks on the details of a rescue package for the debt-ridden country. Investors tend to bid up prices of Treasury securities if they expect turmoil in other financial markets.

Investors have been concerned that Greece could default on its debt and that the trouble there would spread to other countries.

The lackluster action in stocks and questions about Greece drove up Treasury prices and pushed down yields.

The yield on the benchmark 10-year Treasury note maturing in February 2020 fell to 3.74 percent in late trading from 3.80 percent Tuesday. Its price rose 16/32 to 99 1/32. The yield on the 10-year note is linked to rates on mortgages and other consumer loans.

News from Washington on financial regulation also helped Treasurys. A proposed tax on banks that could raise $90 billion over the next decade could be a drag on the financial industry and the broader market. The idea, first proposed by President Barack Obama in January, is gaining support in Congress and could be added to a bill overhauling financial regulation.

In other trading, the yield on the two-year note that matures in March 2012 fell to 1.01 percent from 1.02 percent. Its price rose 1/32 at 99 31/32.

The yield on 30-year bond that matures in February 2040 fell to 4.62 percent from 4.68 percent, while its price rose 28/32 to 100 2/32.

The yield on the three-month T-bill that matures July 22 was unchanged at 0.14 percent. Its discount rate was 0.15 percent.

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Interest rates fell in the bond market Wednesday as investors moved out of stocks and into safe government-backed bonds.Stock prices were mixed even as companies reported more strong first-quarter earnings. Analysts say investors have already priced in big profit gains. The...
US,Credit,Markets
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2010-01-22
 

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