(Bloomberg) -- Treasuries rose, adding to last week’s gain, as Asian stocks extended losses and the Federal Reserve prepared to buy 10-year notes today.
Benchmark 10-year yields will fall about 40 basis points by mid-year and the U.S. economic recovery may stall, according to a report from Goldman Sachs Group Inc., one of the 16 primary dealers that trade directly with the Fed. The central bank also plans to buy Treasuries on May 20 and May 21 as part of its plan to cap borrowing costs and combat the steepest U.S. recession in 50 years.
“The economy is still in trouble,” said Takashi Yamamoto, chief trader in Singapore at Mitsubishi UFJ Trust & Banking Corp., part of Japan’s biggest bank. “Yields will go down.”
The yield on the 10-year note fell three basis points to 3.11 percent as of 10:10 a.m. in Tokyo, according to data compiled by Bloomberg. The price of the 3.125 percent security maturing May 2019 gained 1/4, or $2.50 per $1,000 face amount, to 100 1/8. A basis point is 0.01 percentage point.
Ten-year yields declined 15 basis points last week, as prices posted the first seven-day gain since the period that ended March 20.
The MSCI Asia Pacific Index of regional shares dropped 1.6 percent today, after the Standard & Poor’s 500 Index slid 1.1 percent on May 15, helping fuel demand for the relative safety of government debt.
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