“Treasury 10-year yields touched a five-week low as Italy moved closer to a new election, boosting demand for the safest assets, after an anti-austerity vote last week left Europe’s third-largest economy in political deadlock.
U.S. 10-year notes were little changed after a survey showing China’s services industries slowed last month sent Asian and European stocks lower. Euro-area finance ministers meet in Brussels today to discuss issues including a bailout for Cyprus. In Rome, Stefano Fassina, a top aide to Democratic Party leader Pier Luigi Bersani, said Italy may need to hold another vote this year after passing new electoral laws.
“There are a number of uncertainties like the Italian elections, the issue of Cyprus and these things bring risks to the market,” said Piet Lammens, head of research at KBC Bank NV in Brussels. “This is the context in which bonds normally do well. We are, in the short term, bullish on Treasuries because when you look at the 10-year yield there is still scope for it to fall.”
Benchmark Treasury 10-year yields rose less than one basis point to 1.85 percent at 7:47 a.m.New York time, according to Bloomberg Bond Trader data, after reaching 1.83 percent, the lowest level since Jan. 24. The rate declined 12 basis points, or 0.12 percentage point, last week, the most since the period ended Aug. 31. The price of the 2 percent note due February 2023 fell 2/32, or 63 cents per $1,000 face value, to 101 11/32.
The 10-year rate may reach 1.80 percent in the next few weeks, Lammens said. The yield last fell to that level on Jan. 2, according to data compiled by Bloomberg.
