Treasurys slip as investors flood into stocks
NEW YORK — Treasurys retreated Monday, driving yields slightly higher, as investors abandoned the safety of government debt and flooded into stocks.
Investors had a bigger appetite for risk ahead of key earnings reports this week from big name companies including Goldman Sachs Group Inc., Johnson & Johnson and General Electric Co. The market is hoping the reports will provide some clarity on whether the economy is indeed healing.
Treasurys fell as big gains in financial shares drove the stock market to its best one-day performance in six weeks after an influential analyst raised her rating on Goldman Sachs. Investors are especially focused on bank earnings this week, with four major banks reporting second-quarter results.
In other signs of increased risk-taking, investors also bought up copper, silver and other commodities, and the dollar fell.
Despite the slight decline in Treasurys, much uncertainty about the economy persists, which could support bond prices over the short term.
“We’re still just very much in a trading range here with a bit of a bullish bias,” said Howard Simons, strategist with Bianco Research in Chicago. “We may be here for awhile.”
Investors had sent prices for Treasurys sharply lower this spring as their optimism grew about an impending economic recovery. But since mid-June, the outlook on the economy has been clouded by record unemployment and sagging consumer confidence. This has sent investors in search of less risky assets like Treasurys and the dollar.
As the Dow Jones industrial average rose 185 points, the 10-year Treasury note fell 12/32 to 98 3/32, driving its yield up to 3.35 percent from 3.30 percent late Friday. The yield is still down from an eight-month high of 4.01 percent hit on June 10.
The 30-year bond fell 19/32 to 100 8/32 and its yield rose to 4.24 percent from 4.20 percent.
The two-year note was roughly unchanged at 100 13/32. Its yield held steady at 0.91 percent.
The yield on the three-month T-bill stood at 0.16 percent, same as on Thursday. Its discount rate was 0.17 percent.
Meanwhile, trouble at diversified lender CIT Group Inc. could lead investors to seek shelter in Treasurys, analysts said.
CIT, whose shares have plunged 27 percent in two trading days, is currently in talks with regulators on ways to improve its near-term liquidity as recent losses jeopardize its compliance with capital requirements.
U.S. Treasury Secretary Timothy Geithner said Monday the government may move to provide the ailing company with support.
Last week saw volatile trading in Treasurys, as investors weighed their worries over the economy against concerns that government auctions could be met with weak demand.
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