By Dow Jones Business News,
August 06, 2014, 04:06:00 PM EDT
By Ben Eisen, MarketWatch
U.S. investors weigh geopolitical concerns and European data
NEW YORK (MarketWatch) -- Investors flocked to the safety of German government bonds on Wednesday, as they raced to
shed riskier assets amid a growing conflict in Ukraine and weak European data.
The 10-year yield, which falls as price rise, was down 6.5 basis points on the day at 1.105%, its record low,
according to Tradeweb. The U.K. 10-year gilt yield fell 6.5 basis points to 2.509%.
The risk-off sentiment comes amid news that Russia is amassing troops near the border to Ukraine, raising concerns
about an invasion. Italy's second-quarter GDP report showed the nation slid back into recession, while German
manufacturing sank in June. European stocks fell.
The 10-year U.S. Treasury note (10_YEAR)yield initially fell alongside European yields, but cut back gains throughout
the day as investors stepped back into U.S. stocks. The benchmark yield was down a basis point on the day at 2.473%,
falling for the fourth-consecutive session.
"Geopolitics are on the front burner and U.S. economics are on the back burner," said Michael Cullinane, head of
Treasury trading at D.A. Davidson & Co. He said he would be watching the evolving situation in Ukraine as well as
European economic data for signs about the direction of U.S. yields.
The 30-year Treasury bond (30_YEAR) yield fell half a basis point to 3.275% while the 5-year note (5_YEAR) yield fell
1.5 basis points to 1.651%.
Data showed the U.S. trade deficit shrank 7% in June due to a decrease in imports of petroleum. That could have
positive effects on second-quarter GDP revisions
The Treasury Department said its quarterly refunding will include $67 billion in notes and bonds next week. There was
little discussion during a meeting of market experts about an idea to issue a new type of ultra-long bond that would
mature in more than 30 years.
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