Treasuries climb as U.S. growth concern spurs demand for safety

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The central bank will purchase as much as $5 billion today of U.S. government securities due from September 2018 to August 2020 as part of the program.

Treasuries rose yesterday for the first time in five days as a New York factory gauge dropped, underscoring concern growth isn’t strong enough to lead to improvement in the labor market.

A government report today showed international demand for U.S. financial assets climbed in July as investors sought shelter from the debt crisis in Europe, where leaders have been struggling to find a solution. Net buying of long-term equities, notes and bonds totaled $67 billion during the month, compared with net purchases of $9.3 billion in June, the Treasury Department said today in Washington.

German Sentiment

Treasuries were supported earlier as a survey showed German investor sentiment was negative for a fourth month in September, boosting demand for the safest assets. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to minus 18.2 from minus 25.5 in August.

The European Central Bank stands ready to buy debt to help counter the euro area’s financial crisis, as policy makers strive to bolster economic growth.

“It doesn’t take much to tip us into a global recession,” said Joachim Fels, chief economist at Morgan Stanley in London. “It could go either way.”

Stocks are beating bonds this year. Treasuries returned 1.3 percent in 2012 through yesterday, Bank of America Merrill Lynch indexes show. The Standard & Poor’s 500 Index gained 18 percent, including reinvested dividends.

The Fed said in its Sept. 13 statement that its bond purchases also aim to support the mortgage market.

U.S. 30-year fixed mortgage rates have fallen to 3.52 percent from 4.18 percent a year ago, according to in North Palm Beach, Florida. The rate was 1.65 percentage points more than 10-year Treasury yields on Sept. 14, the least since July 2011.

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