Tags: Two | Year | Treasury | Yield | Record | Low

Two-Year Treasury Yield Sinks to Record Low

By    |   Wednesday, 26 May 2010 11:08 AM

Two-year Treasury note yields have dropped to a record low, as global investors worried about Europe’s debt crisis flock to Treasuries as a safe haven.

Many experts say our own debt explosion will ultimately send U.S. interest rates much higher. But for now investors are eager to lend the U.S. government money.

An auction of $42 billion of two-year Treasuries produced a yield of 0.769 percent Tuesday, topping the prior record of 0.804 percent set in November.

The growing conflict between the Koreas also has investors seeking a safe harbor.

"The combination of another country being thrown into the alphabet soup of nations possibly hit by spreading Greece contagion (Spain), combined with North Korean threats, all are forcing a bid to the Treasury market," Christian Cooper, a bond trader at Jefferies & Co, told The Wall Street Journal.

Europe’s crisis also has sent the dollar soaring against the euro, not long after many experts proclaimed the greenback’s days as a reserve currency were numbered.

“A year ago we were supposed to believe the dollar’s reserve currency status was finished, and now here we are at the other extreme,” Jim O’Neill, chief economist at Goldman Sachs told Bloomberg.

But he says market focus may soon return to U.S. debt woes.

“Going forward, you have to consider whether the news (for Europe) is going to be even worse, or are people going to start talking about the U.S. again, which they’ve suddenly forgotten?”

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Two-year Treasury note yields have dropped to a record low, as global investors worried about Europe s debt crisis flock to Treasuries as a safe haven. Many experts say our own debt explosion will ultimately send U.S. interest rates much higher. But for now investors are...
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2010-08-26
Wednesday, 26 May 2010 11:08 AM
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