Treasuries Advance After European Sovereign Borrowing Costs Appreciate

Treasuries rose after an increase in borrowing costs in Spain, Hungary and France added to concern Europe’s debt crisis is spreading, boosting demand for the safest assets.

The yield on the 10-year note (USGG10YR) earlier rose to the highest in more than a week after ADP Employer Services reported companies added more jobs than forecast in December and the Labor Department said fewer Americans filed claims for unemployment benefits last week. Italy’s largest lender announced a share sale because the debt crisis is worsening.

“We’re seeing Spanish spreads blow out and we are the beneficiaries of that,” said Anthony Cronin, a Treasury trader at Societe General in New York, one of the 21 primary dealers that trade with the Federal Reserve. “That’s overshadowing the stronger economic news. There are concerns about European banks needing to raise more capital.”

The yield (USGG10YR) on the 10-year note fell 2 basis points, or 0.02 percentage point, to 1.96 percent at 10:02 a.m. in New York. The price of the 2 percent securities due November 2021 rose 7/32, or $2.19 per $1,000 face amount, to 100 13/32. It touched 2.019 percent, the highest since Dec. 27.

To contact the reporter on this story: Susanne Walker in New York at swalker33@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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