No rush from U.S. Treasuries, as yields fall while Asian stocks slump
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U.S. Treasury bonds’ status as a haven seemed intact in Asia on Monday, as yields fell despite Standard & Poor’s downgrading of Uncle Sam’s credit rating on Friday.
It may have helped Treasuries that Asian stocks were broadly lower, as some investors bailed out ahead of European and U.S. equity trading.
The 10-year Treasury note yield slid to 2.50% in late Asian trading, down from 2.56% on Friday.
Shorter-term yields also fell. The two-year T-note dropped to a record low 0.26% from 0.29%.
Over the weekend, analysts had been uncertain as to how global investors would react to S&P’s move late Friday to lower the U.S. government’s credit rating to AA+ from AAA -- the first time in history that America has lost its top-rung rating.
S&P cited concerns about the nation’s growing debt load and uncertainty about Washington’s willingness to rein-in borrowing.
Many on Wall Street argued that investors were unlikely to flee Treasuries, because even with the one-notch downgrade there still is no significant risk that the U.S. would be unable to pay its bills.
What’s more, with the global economic recovery fading and stock markets stumbling, many investors seemed likely to continue to turn to Treasuries as a place to hide.
In Asian trading, Treasury yields fell as stock markets’ losses worsened Monday. Japan’s Nikkei-225 index was down 2.1% late in the day’s session after tumbling 5.4% last week.
Australian’s main market index was off 2.5% after slumping 7.2% last week.
In China, the Shanghai composite index was down 3.7%. Taiwan’s main index, which plummeted 9.2% last week, was off 3.6%.
For updated Asian market indexes, go here.
-- Tom Petruno