The familiar refrain of capital flowing to where risks are best understood.
“Sovereign risk has taken center stage and the beat of the drum is starting to get louder and louder,” said Larry Milstein, managing director in New York of government and agency debt trading at RW Pressprich & Co., a fixed-income broker and dealer for institutional investors. “The safe-haven bid has come back into play, and investors are looking for safety.”
The yield on the two-year note dropped five basis points, or 0.05 percentage point, to 0.76 percent, from 0.81 percent on Jan. 29, according to BGCantor Market Data. It touched 0.72 percent, the lowest level since Dec. 9. The price of the 0.875 percent security maturing in January 2012 rose 3/32, or 94 cents per $1,000 face amount, to 100 7/32.
The 10-year note yield fell two basis points to 3.57 percent and touched 3.53 percent, the lowest since Dec. 21. The difference between 2- and 10-year yields was 2.80 percentage points. It touched a record high of 2.90 on Jan. 11.
U.S. 30-year bonds fell for the week, pushing yields up three basis points to 4.52 percent.