By Ellie Ismailidou, MarketWatch
NEW YORK (MarketWatch) -- Treasury yields finished lower after a
volatile session Friday, registering a six-day losing streak, the
longest since January 7, 2015.
The flight-to-safety was enhanced on Friday, as investors
dropped riskier assets during a stock selloff
(http://www.marketwatch.com/story/us-stocks-futures-tilt-south-ahead-of-ge-consumer-prices-2015-04-17)
fueled by Greek default fears
(http://www.marketwatch.com/story/top-eu-official-to-greece-agree-to-reform-by-may-11-or-else-2015-04-17)
and new Chinese regulations
(http://www.marketwatch.com/story/china-regulators-to-allow-short-selling-by-fund-managers-2015-04-17)
that will enable investors to bet that highflying stocks will fall
in value.
The market changed direction through choppy trading several
times throughout the week, as investors digested mixed economic
reports
(http://www.marketwatch.com/story/treasury-yields-rise-slightly-after-mixed-reports-greek-selloff-2015-04-16)
and diverging comments from Federal Reserve officials, in an effort
to discern when the "data-dependent" Fed will deliver the first
hike in the benchmark fed funds rate since 2006. Read: Fed shies
away from June rate hike
(http://www.marketwatch.com/story/fed-shies-away-from-june-rate-hike-2015-04-17).
But the underlying force driving the Treasury market wasn't so
much the liftoff date but rather the pace and the stopping point of
the increase, especially as liquidity in the market has been drying
out recently, said Guy LeBas, chief fixed income strategist at
Janney Montgomery Scott.
"There has been a lot of intraday volatility lately, as
liquidity is on the light side due to fewer buyers and sellers in
the Treasury market," LeBas said.
Despite the volatility, often driven by technical rather than
fundamental factors, an overarching theme of soft growth and missed
inflation targets emerged from this week's reports, which enhanced
the price action in the Treasury market and pushed yields
lower.
The yield on the 10-year note was down three basis points on the
day and 10.1 basis points over the week to 1.849% after rising to a
session high of 1.909% earlier in the day, according to data from
Tradeweb.
The yield on the two-year note declined 5.6 basis points over
the week but rose two basis points to 0.504% on Friday. And the
30-year bond yield lost 4.1 basis points to 2.516%. Treasury prices
move in the opposite direction of yields.
Meanwhile, the eurozone government bond market continued its
unprecedented free fall, fueled by the European Central Bank's
trillion-euro bond buying program that aims to revive the
eurozone's sluggish economy.
The German 10-year benchmark bond yield hit record lows on
Friday, declining by 1.5 basis points to 0.073%.
Conversely, the yield on the 10-year Greek bond reached a
29-month high of 13.022% on Friday, as Greece is at risk of running
out of cash over the next few months unless it agrees on an
economic-overhaul program with its international lenders.
A successful reform deal will unblock the next portion of
bailout money for Greece, which could be needed to repay upcoming
loans to the International Monetary Fund.
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