Bonds dip on profit-taking as anxiety continues

New York: US Treasuries prices slipped on Friday as investors took profits a day after benchmark yields flirted with their lowest level in at least 60 years as anxiety over the Eurozone debt crisis fuelled last week's rally of safe-haven bonds.

Despite Friday's modest pullback, benchmark ten-year Treasury note yields fell for a ninth consecutive week, matching a streak last seen in 1998, according to Reuters data.

"We are at levels where most people would like to go short, but they can't because of Europe," said Chuck Retzky, director of futures sales at Mizuho Securities USA in Chicago.

Investors bought Treasuries, German Bunds and other low-risk assets this week as Greece's political turmoil and deterioration of the Spanish banking system fuelled worries that their financial problems could engulf the region and spiral into a global financial crisis.

Major stock indexes were on track to post their worst week of the year with the Standard and Poor's 500 falling 4.3 per cent on the week.

Glass half-empty

"Sentiments are still pretty negative," said Francis Rodilosso, portfolio manager with Market Vectors in New York. "People are definitely seeing the glass half-empty."

Fears over a possible Greek exit from the Eurozone grew after news on Friday that German Chancellor Angela Merkel had discussed with Greek President Karolos Papoulias whether his country should hold a referendum on staying in the euro. The idea was vehemently rejected by Greece's two biggest parties.

Fitch on Thursday downgraded Greece deeper into junk territory, citing the risk that it might leave the Eurozone.

US ten-year Treasury notes last traded down 0.31 in price at 100.22 to yield 1.72 per cent, up three basis points from Thursday. The ten-year yield finished at 1.69 per cent on Thursday, the lowest closing level in at least 60 years, according to Tradeweb.

Thirty-year bonds last traded down 0.56 at 103.84 to yield 2.81 per cent, up three basis points on the day. The yield touched its lowest level in five months on Thursday.

Jitters about Europe's fiscal woes disrupting the global economy again also supported the notion the US Federal Reserve and the European Central Bank would soon introduce more monetary stimulus, investors said.

"The market is pricing in more unconventional measures," said Bill Irving, who oversees about $40 billion (Dh147 billion) at Fidelity Investments in Boston.