The FINANCIAL — US Treasuries prices fell on Friday as Italian government bond yields eased and the European Central Bank intervened in markets to lean against the higher premiums investors have been demanding for European debt.
The possibility the ECB might start lending funds to the IMF to help struggling Eurozone countries, or that it might become a lender of last resort, a role it has thus far firmly resisted, encouraged investors to shoulder riskier assets at the expense of safe-haven US government debt.
The readiness, or lack thereof, of the ECB to function as a lender of last resort will be a dominant market theme in weeks to come. Many investors, analysts and policymakers believe the ECB must step in to play that role to save the euro.
Benchmark 10-year Treasury notes fell 13/32 in price, their yields edging up to 2.01 per cent from 1.97 per cent on Thursday.Stronger US economic data would tend to elbow Treasury yields higher, but what's prevented that from happening — and is likely to do so in the weeks ahead — "is waking up each day to some new development in Europe," Van Order said.
Spain holds a parliamentary election this weekend and the centre-rightist People's Party appears to enjoy a wide lead over the ruling Socialists. Italian and Spanish debt yields fell on Friday after the ECB intervention alleviated some pressure in those markets.
Bond investors get a cornucopia of economic data ahead of this week's Thanksgiving Day holiday when US markets close.
October home sales figures are due on Monday and the advance estimate of third-quarter gross domestic product growth is due on Tuesday; economists polled by Reuters estimate GDP grew 3.4 per cent in the third quarter.
October personal income and spending figures, durable goods orders, and new jobless claims figures for the latest week are all due on Wednesday.
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