Bad news for Goldman and Greece, good for bonds

By Annalyn Censky, staff reporter

NEW YORK ( -- Treasury prices rose Friday, as investor worries grew about Greece's aid package and a credit rating agency downgraded Goldman Sachs stock.

What prices are doing: The benchmark 10-year note rose 18/32 to 99-23/32, driving the yield down to 3.67%. Bond prices and yields move in opposite directions.

Click the chart for current prices and yields.

The 30-year bond rose 1-2/32 to 101-20/32 with a 4.53% yield. The 2-year note inched up to 100-2/32 with a 0.97% yield. The 5-year note rose 10/32 to 100-12/32 with a yield of 2.43%.

What's moving the market: Treasurys have been in push-and-pull mode all week, influenced by news about the Goldman Sachs hearings, the Federal Reserve's announcement on interest rates, credit downgrades of Greece, Portugal and Spain, and positive reports about the U.S. economy.

The European Union and International Monetary Fund are imposing greater austerity measures on Greece in order for the debt-laden country to get a bailout package. Worries about sovereign debt in Greece, Portugal and Spain -- which all had credit downgrades this week -- make U.S. debt an attractive alternative especially to foreign investors.

Goldman Sachs (GS, Fortune 500) was again in the headlines Friday morning, after Standard & Poor's cut its rating of the company to a "sell." Media also reported on a possible criminal investigation by the Justice Department. Earlier in the week, bonds rallied and the stock market plunged as the Senate held a Goldman Sachs hearing and S&P downgraded Greek debt to junk status.

Friday also brought a government report that said the U.S. economy grew for the third straight quarter, although at a slightly lower rate than expected. Good news about economic growth can often drive bond investors to turn to riskier assets like stocks, but on Friday, other news offset that selloff effect.

Overall, appetite for U.S. debt was healthy this week, with the government receiving decent demand in its auctions of $129 billion in bonds. Slightly higher Treasury prices on Friday show the market isn't having trouble absorbing the new supply.

What analysts are saying: "What's driving the markets right now is the tug-of-war between the growing federal investigations of Goldman Sachs, increasingly positive news on the economy, and the continuing saga of the Greek debt crisis," said Jonathan Lewis, principal of Samson Capital Advisors.

The tug-of-war looks likely to carry over into next week, Lewis said, as headlines continue about Goldman and Greece, and several economic reports are scheduled for release culminating with the national jobs report on May 7. To top of page

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