Treasuries rose, pushing 10-year note yields to almost a two-week low, amid concern that Hurricane Sandy will disrupt business and hurt the U.S. economic recovery.
The Securities Industry and Financial Markets Association recommended trading in dollar-denominated fixed-income securities end at noon in New York because of the storm. U.S. debt remained higher even as a report showed consumer spending exceeded forecasts in August. Treasuries were also supported on speculation that Greece will need to restructure its debt, and before a report this week that economists predict will show the U.S. jobless rate climbed in October.
“Most eyes are on the hurricane and as such volume is half the normal amount,” said David Ader, head of U.S. government bond strategy at CRT Capital Group LLC in Stamford, Connecticut. “The same European stories and uncertainty brought us a little lower in yield overnight, and those stories and the uncertainty persists. There was nothing in the data that we didn’t know coming into today.”
The U.S. 10-year yield fell three basis points, or 0.03 percentage point, to 1.71 percent at 8:49 a.m. in New York, the lowest since Oct. 16, according to Bloomberg Bond Trader prices. The 1.625 percent note due in August 2022 rose 9/32, or $2.81 per $1,000 face amount, to 99 7/32.
The jobless rate climbed to 7.9 percent this month from a three-year low of 7.8 percent in September, according to a Bloomberg News survey of economists before the Nov. 2 report. Employers hired 125,000 workers, following an increase of 114,000 in September, according to another Bloomberg survey.
“The U.S. economy is just not going strong enough to dissuade the Federal Reserve from further stimulus,” said Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets Ltd. in Edinburgh. “We don’t know how bad Hurricane Sandy will be at this point, but any substantial damage created by it will probably have a near-term negative impact on growth expectation. That will underpin demand for Treasuries.”
Treasuries rose on Oct. 26, sending the 10-year yield down eight basis points, after a report showed Spain’s unemployment rate climbed to a record 25.02 percent, fueling demand for the relative safety of U.S. debt.
The European Commission, the European Central Bank and the International Monetary Fund proposed a restructuring of Greek debt that would require public-sector lenders to take losses, Spiegel reported without saying there it got the information.