Treasuries outperformed stocks last month for the first time since October as money managers sought the relative safety of U.S. debt after Italy held an inconclusive election and the Federal Reserve reinforced its commitment to buying government debt.
Investors in U.S. government securities earned 0.6 percent, or an annualized 8 percent, in the month, based on Bank of America Merrill Lynch indexes. The MSCI All-Country World Index (MXWD) of shares was little changed, according to data compiled by Bloomberg.
“People are selling stocks and going into bonds, the safe haven,” said Yoshiyuki Suzuki, head of fixed income in Tokyo at Fukoku Mutual Life Insurance Co., which has about $61.5 billion in assets. Italy’s vote was a “very bad result” that may renew Europe’s debt crisis, he said.
U.S. 10-year yields were little changed at 1.87 percent as of 9:45 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 2 percent security due in February 2023 was 101 6/32.
The Dow Jones Industrial Average beat the MSCI index last month with a 1.8 percent return including reinvested dividends. The measure is about 1 percent away from its October 2007 (INDU) record. It fell 0.2 percent yesterday.
Treasuries began the week with their biggest one-day rally since November as Italy concluded its election without a winner. The outcome highlights the risk that Europe’s recovery may slow, making it more difficult for nations to pay their debts.
Federal Reserve Chairman Ben S. Bernanke signaled in congressional testimony this week the central bank is prepared to keep buying bonds at its present pace, as he dismissed concerns record easing risks sparking inflation or fueling asset price bubbles. He told lawmakers the Fed’s policies are helping to improve demand for homes and cars by lowering long-term interest rates.
Manufacturing in the U.S. probably expanded for a third month in February, based on Bloomberg News surveys of economists. The Institute for Supply Management’s factory index was 52.5, versus 53.1 in January, based on the survey before the report at 10 a.m. New York time today. A number greater than 50 shows growth.
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