“Treasuries held a three-day gain as Democrat and Republican lawmakers have just hours left to agree on a budget deal that both sides say is necessary to prevent a blow to the nation’s economy.
U.S. government securities gave up their first-place rank among world bonds in 2012 as signs of improvement in the global economy cut demand for the safety of Treasuries. Benchmark notes rose last week as lawmakers failed to reach agreement to avoid the so-called fiscal cliff of more than $600 billion in spending cuts and tax increases set to start tomorrow. Allowing those changes to take effect would cause a recession in the first half of 2013, according to theCongressional Budget Office.
“We’ve had a pretty significant move in Treasuries in the past few days,” said Owen Callan, an analyst at Danske Bank A/S (DANSKE) in Dublin. “The market got quite complacent and assumed a deal would be done a lot earlier. It does appear that the two parties are still some way apart but I still think they will come up with some kind of deal or stopgap. Both sides recognize the danger of not coming to an agreement.”
The 10-year yield was little changed at 1.70 percent at 7:37 a.m. in New York, according to Bloomberg Bond Trader prices. The 1.625 percent note due in November 2022 was at 99 11/32. Ten-year yields declined six basis points last week….”
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