Treasurys rise modestly as savings rate jumps
NEW YORK — Treasury prices were modestly higher Friday, buoyed by a report suggesting consumers are still afraid to spend.
The Commerce Department said the savings rate soared to a 15-year high of 6.9 percent in May as spending rose a modest 0.3 percent.
The report, which touched off a moderate decline in stocks, was a clear sign that the American consumer is still feeling doubtful about the economy. The news sent investors in search of government debt as a safety measure.
“One of the reasons people save more is they are less confident,” said Howard Simons, a strategist with Bianco Research in Chicago. “These are the same people who are in financial markets. As long as we don’t have particularly attractive alternatives elsewhere, the safety of the Treasury market looks pretty good.”
Treasurys extended gains logged Thursday following a strong auction of government debt.
The Treasury Department sold a total of $104 billion of notes this week in a series of auctions that were all met with solid demand. That helped ease concerns that the government would have to raise rates to entice buyers in order to fund its economic stimulus programs.
Such a move could seriously impede the government’s ability to revitalize the economy. Long-term Treasury yields are closely tied to interest rates on mortgages and other consumer loans. Mortgage rates have been on the rise, spiking to seven-month highs in early June as inflation fears weighed on the market.
On Friday, as the Dow Jones industrials lost 34 points, the 10-year Treasury note’s price was up 3/32 at 96 20/32, and its yield was down at 3.53 percent from 3.54 percent late Thursday.
The 30-year bond’s yield was up slightly to 4.34 percent from 4.33 percent. Its price was flat at 98 17/32.
The two-year note’s yield fell to 1.12 percent from 1.13 percent, and its price rose about 1/32 to 100.
The yield on the three-month Treasury bill rose to 0.17 percent from 0.16 percent. Its discount rate stood at 0.18 percent.
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