Treasury 10-year yields fall under 1.90%
By Deborah Levine, MarketWatch
May 4, 2012

Long-term yields have longest run of weekly declines since 2008

NEW YORK (MarketWatch) — Treasury prices rose Friday, pushing 10-year yields to their lowest level in three months, after a report on the U.S. labor market in April.

The data reinforced worries about the outlook for economic growth, boosting interest in safer assets like U.S. bonds instead of stocks that have pushed yields down for the longest weekly run since the depth of the U.S. credit crisis more than three years ago.

Yields on 10-year notes (ICAPSD:10_YEAR) , which move inversely to prices, fell 6 basis points to 1.88%. A basis point is one one-hundredth of a percentage point.

A close at that level would be the lowest for the benchmark yields since Feb. 2.

Yields on 5-year notes (ICAPSD:5_YEAR)  declined 4 basis points to 0.79%, their lowest since early February.

Thirty-year-bond yields (ICAPSD:30_YEAR)  fell 5 basis points to 3.07%, the lowest since early March.

Yields have hovered this week near their lowest level since February as more recent data left investors disappointed and worried about the U.S. economy’s growth potential.

The U.S. Labor Department said the economy added 115,000 jobs in April, fewer than economists expected. It also showed the number of jobs added in March and February were revised upward and the unemployment rate fell to 8.1% as people dropped out of the labor force.

“We’re disappointed, but not surprised,” said Paul Montaquila, head fixed-income trader at Bank of the West, which oversees $60 billion in assets. “The economy is in molasses mode. We’re just not getting anywhere.”

That shouldn’t be a surprise because Fed Chairman Ben Bernanke has alluded to the problems in the labor market many times, he said.

The data “allows the Fed to remain in a wait and see mode,” he said. There’s not reason to believe the Fed will do anything like change its bond-purchase program, an option the central bank continues to leave open. See more on what Fed may do.

U.S stocks dropped more than 1%, with the Dow Jones Industrial Average (DJI:DJIA)  losing 158 points shortly before the closing bell.

As for Treasury yields, “We’re back in a trading range, but I like to think we’re near the bottom,” Montaquila said. Ten-year yields could rise back to 2.25% or so but “they can’t go higher because of the amount of bids that come in at those levels.”

“There’s a lot of money sitting in company coffers, retirement accounts and everywhere waiting for higher yields,” he said.

Election uncertainty

Also helping keep yields low is uncertainty about overseas events, slowing growth in major global economies and more immediately, important elections in Greece, France and Italy this weekend.

“The world scenario doesn’t help because the slightest bit of bad news out of — pick your country — sends everybody clamoring for Treasurys,” Montaquila said.

Ten-year yields have fallen for a seventh straight week, the longest string of declines (or gains in price) since the depths of the U.S. credit crisis at the end of 2008.

Yields on 30-year bonds have declined for a fifth week, also the longest run since 2008.

Five-year yields have fallen for seven straight weeks as well, their longest run since one ending in June 2011, when concerns about Greece’s finance and slowing growth were in the headlines.

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