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Treasurys ratchet higher amid Middle East tensions

Treasurys ratchet higher amid Middle East tensions

Treasury prices advanced Monday as investors headed for the safety of government securities amid rising tensions in the Middle East between Israel and Hamas. Meanwhile, the interest rate on six-month U.S. Treasury bills dropped to its lowest level on record at the government's weekly auction.
The three-day Israeli strike in Gaza sent stocks falling and oil prices rising on fears there might be a supply disruption. That in turn increased the attractiveness of Treasurys, which are seen as a safe-haven investment in times of economic or political uncertainty.
The bond market has enjoyed a run during the past year, sending prices higher and yields to record low levels, as investors sought out investments to protect their assets from the global economic crisis. The market's movements on Monday were muted, however, due to low trading levels because of the holiday-shortened week.
The Treasury Department said it auctioned $27 billion in six-month bills at a yield of 0.25 percent, an all-time low. That's down from a rate of 0.285 percent last week. The department also auctioned $26 billion in three-month bills at a yield of 0.05 percent, up slightly from last week's 0.04 percent.
The two-year Treasury note rose 8/32 to 100 8/32 and its yield slipped to 0.75 percent from 0.89 percent late Friday.
The 10-year Treasury note rose 20/32 to 114 31/32 and its yield fell to 2.07 percent from 2.17 percent. The 30-year Treasury bond rose 19/32 to 139 5/32 and its yield fell to 2.58 percent from 2.61 percent.
The three-month Treasury bill's yield was unchanged at 0.01 percent. Low yields indicate high demand; investors have been willing to stash their money in T-bills with little or no returns because their principal will remain intact.
Meanwhile, the cost of short-term dollar loans between banks eased Monday as central bank actions to loosen credit markets continued to have an impact.
The interest rate on three-month dollar loans _ known as the London Interbank Offered Rate, or Libor _ slid by less than a hundredth of a percentage point to 1.459 percent from 1.467 on Dec. 24, the last day before the long weekend that the rate was fixed by the British Bankers' Association.
The rates remain well above their central bank benchmarks, however, indicating the financial system is still under stress.
The U.S. Federal Reserve, Bank of England and the European Central banks have all cut interest rates and made additional credit available to banks in hope of easing the effects of the world financial crisis and getting lending going again. Heavy bank losses on subprime investments and sagging economies have made banks hoard cash.
Interbank rates are important for the wider economy since they affect the cost of loans for business and consumers.


Updated : 2021-06-12 23:07 GMT+08:00