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If you enjoy the content at iBankCoin, please follow us on TwitterTreasury prices extended their rally on Friday as more money flowed out of European bonds and equities and into safe-haven U.S. debt, but traders said prices could fall next week ahead of scheduled auctions.
The Treasury Department plans to sell $99 billion in new debt on Tuesday, Wednesday and Thursday. Selling ahead of the auctions to lower auction prices and raise yields could overpower the safety bid, which remained strong going into the weekend.
“There’s so much uncertainty, even beyond Greece, in Europe that we’re getting yields that are low despite the fact that we have nearly $100 billion of twos, fives and sevens to sell next week,” said David Coard, head of fixed income sales and trading at Williams Capital in New York.
“I think the street is going to do its level best to get a concession, because the only way these yields are justified is if we continue to have news out of Europe that creates this safe-haven buying. The economy is sluggish but it’s not falling out of bed and unless it were falling out of bed there would be no justification for these yields.”
Two year notes continued their rally for an 11th straight week, the longest in more than 30 years, coming close during trading on Friday to a record intraday low touched on November 4, 2010 at 0.3200 percent.
Two year notes closed unchanged in price from Thursday and yielding 0.346 percent.
Nervousness about the Greek debt situation potentially becoming “contagious” and affecting the euro zone and global financial system whetted investors’ appetite for Treasuries.
