July 23 (Bloomberg) -- Treasuries climbed, with five-, 10- and 30-year yields sliding to records, as concern mounted that Greece’s failure to meet bailout targets may worsen the European debt crisis, stoking demand for the safest assets.
The yield on the 10-year note plunged below the old mark set June 1 before the meeting tomorrow of Greece’s troika of international creditors, while the cost of insuring Spain’s debt rose to a record. U.S. government debt extended last week’s rise before reports this week forecast to show growth cooled. The Federal Reserve purchased $4.779 billion of Treasuries today.
“Money is fleeing every place in the world and then coming here,” said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA Inc. “The path of least resistance is to lower yields. It’s all driven by Europe.”
The benchmark 10-year yield fell two basis points, or 0.02 percentage point, to 1.43 percent at 12:57 p.m. in New York. The 1.75 percent note due in May 2022 rose 7/32, or $2.19 per $1,000 face amount, to 102 28/32. The yield fell to as low as 1.3960 percent, with the five-year rate dropping to 0.5411 percent and the 30-year yield sliding to 2.4752 percent.
The 10-year record compares with an average of 3.76 percent over the past 10 years, according to data compiled by Bloomberg.
Valuation measures show U.S. sovereign securities are at the most costly levels ever. The term premium, a model created by economists at the Fed, surpassed negative 1.01 percent, the all-time most expensive. A negative reading indicates investors are willing to accept yields below what’s considered fair value.
Treasuries returned 1.2 percent this month after a 0.4 percent loss in June, according to Bank of America Merrill Lynch indexes.
“No one in the dealer community thinks yields are attractive,” said Brian Edmonds, head of interest rates in New York at Cantor Fitzgerald LP, one of 21 primary dealers that trade with the Fed. “It’s more of a trade where people are being forced to buy.”
Ten-year U.K., Finnish and Canadian rates fell to the lowest on record, as did German two-year note yields. Japan’s five-year yield slid to the least since 2003.
German bunds advanced after El Pais reported, without citing anyone, that six Spanish regions may ask for aid from the central government, and speculation grew that Greece will miss its bailout targets. German government bonds handed investors a 2.6 percent return this month, according to Bank of America Merrill Lynch indexes.