Five-year securities rose before a $35 billion sale of 2018 debt today. The notes were close to the most-expensive level this year relative to their two- and 10-year peers as investors sought shorter-maturity debt amid Fed pledges to keep borrowing costs down. Treasuries also gained as the banking crisis in Cyprus and political turmoil in Italy boosted demand for the relative safety of U.S. government debt.
“The Fed has signaled interest rates will stay low for a while and that’s likely to support demand for Treasuries, especially shorter-dated notes,” said Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets in Edinburgh.
The 10-year note yield declined six basis points, or 0.06 percentage point, to 1.86 percent at 7:20 a.m. New York time, according to Bloomberg Bond Trader prices. The 2 percent securities due February 2023 gained 1/2, or $5 per $1,000 face amount, to 101 10/32. The five-year yield dropped three basis points to 0.74 percent.
An index of pending home sales fell 0.3 percent in February after rising 4.5 percent in the previous month, according to the median estimate in a Bloomberg survey of analysts.