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TREASURIES-Treasuries gain as stocks, housing bolster safety buying
March 20, 2012 / 1:27 PM / 6 years ago

TREASURIES-Treasuries gain as stocks, housing bolster safety buying

* Stocks set to dip after recent run-up
    * Housing starts fall in February
    * Fed buying longer-dated Treasuries

    By Chris Reese	
    NEW YORK, March 20 (Reuters) - U.S. Treasury debt prices
rose on Tuesday as weakness in the stock market and a dip in
housing starts in February bolstered the safe-haven appeal of
U.S. government debt.	
    Wall Street stocks looked set to open lower as investors
took a break from recent gains. The benchmark S&P 500 has risen
in eight of the past nine sessions, putting the index at its
highest point since May 2008 and 10 percent below the record
close in October 2007.   	
    The government said U.S. housing starts fell in February,
but permits for future construction jumped to their highest
level since October 2008. 	
    Benchmark 10-year Treasury notes were trading
12/32 higher in price to yield 2.34 percent, down from 2.38
percent late Monday, while 30-year bonds gained
23/32 to yield 3.44 percent, down from 3.48 percent.	
    Benchmark yields on Monday touched a 4-1/2 month high of
2.39 percent. Treasuries prices plunged last week as signs of an
improving U.S. economy and some stabilization of Europe's debt
troubles sapped at their safety allure.	
    Still, yields remain historically low. Ten-year yields of
1.67 percent hit in September was the lowest in at least 60
years.	
    "It would be natural to assume that since a bottom in bonds
has been established, the smart thing to do would be to call for
a rapid 2009 style back up in long-term rates," said Steven
Ricchiuto, chief economist at Mizuho Securities in New York.	
    "Although such an outcome cannot be ruled out, it is not our
central call. Instead, our new market call is for the 10-year
note to establish a new 2 percent to 2.5 percent trading range
and to hold this range through at least the summer," he said,
adding "we find it hard to fight the Fed."	
    The U.S. Federal Reserve on Tuesday was set to buy $1.75
billion to $2.25 billion of Treasuries maturing February 2036
through February 2042, as part of its latest stimulus program
nicknamed "Operation Twist."

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