Bonds rise as European concerns 'simmer'

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- Investors returned from a holiday weekend with a gloomier outlook on the economy, thanks to an old concern that won't seem to die -- the health of European banks.

An analysis in Tuesday's Wall Street Journal said Europe's stress tests, meant to measure the health of the continent's financial sector, understated major banks' holdings of government debt.

Those renewed concerns about overseas banks pushed Treasury prices higher Tuesday, snapping three straight sessions of decline.

"We can't seem to break from simmering concerns over Europe's banking sector," said Kim Rupert, fixed income analyst at Action Economics. "It's sending people back into safe-haven Treasurys."

The yield on the benchmark 10-year note fell to 2.6%, down from 2.7% Friday. Bond prices and yields move in opposite directions. The Treasury market was closed Monday in observance of Labor Day.

The yield on the 5-year note eased to 1.41%, the 30-year bond fell to 3.66% and the 2-year note slid to 0.49%.

Bond prices have soared this summer on concerns about a double-dip recession, with the yield on the 10-year Treasury note falling as low as 2.47% last month from 3% at the end of July.

Better-than-expected data on jobs and housing offered a sliver of hope about the economy late last week, with Treasury prices falling Wednesday through Friday.

The sell-off in the bond market was "a bit overdone" Friday, Rupert said, after the government released its monthly unemployment report.

The report showed private-sector businesses added 67,000 jobs to their payrolls in August, which was higher than the 44,000 forecasted. The unemployment rate rose to 9.6% in the month from 9.5% in July, matching expectations.

Rupert expects Treasurys to be "pretty range-bound" over the next few weeks as investors digest a "terrible July and not-so-bad August." But the federal government's efforts to bolster the economy, including the homebuyer tax credit that expired in April, make comparisons to last year's situation difficult.

"We've had a lot of noise within the data thanks to these government interventions," Rupert said. "It's been tough to find clean economic data."

Moving forward, investors are looking to a $33 billion auction of 3-year Treasury notes later Tuesday. The government will also sell $21 billion in 10-year notes and $13 billion in 30-year bonds later in the week. To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.