Long-term Treasuries, heading for their worst quarter in two years, may at last have found some support.
While 30-year bonds lost 6 percent over the past two months, according to Bank of America Merrill Lynch data, they were little changed Monday after posting their first weekly gain since April. That may be welcome news to Pacific Investment Management Co., whose flagship fund doubled holdings of the debt in the first three months of 2015.
“After selling off, the long-bond has found solid footing and yields moved back toward the middle of the range,” said Ian Lyngen, a government-bond strategist at CRT Capital Group LLC in Stamford, Connecticut. We’re watching “the data, but also the movements of other asset prices.”
Thirty-year Treasury yields were at 2.89 percent as of 8:02 a.m. New York time, after reaching a seven-month high of 3.13 percent on May 12. The yield plunged to a record 2.22 percent on Jan. 30. The price of the 3 percent bond due May 2045 was at 102 9/32 of face value Monday.
The benchmark 10-year security yielded 2.13 percent, from as high as 2.36 percent last month.
Prices on Treasuries fluctuated Monday amid speculation Greece may be moving closer to reaching a financing deal with its international creditors.
“Obviously the Greek drama continues to unfold,” said Lyngen. “That is more of an ancillary influence and risk-on potential if there is ever a sustainable deal reached.”
The $110 billion Pimco Total Return Fund held $18.6 billion of 30-year Treasuries as of March 31, a regulatory filing showed Friday. That’s a fivefold increase since Sept. 30, days after Bill Gross left for Janus Capital Group Inc. The fund has returned 1.2 percent in 2015, topping 61 percent of peers.
“The long end of the Treasury market has sort of disassociated itself with the 10-year,” Dan Fuss, one of the Boston-based managers of the $23.7 billion Loomis Sayles Bond Fund, said in an interview in Tokyo on May 27. “They tend to go the same way, but the amplitude of the swing at the long end is way outside of normal.”
Fuss said he’s avoiding 30-year Treasuries, and focusing on paper maturing in 18 months to two years.
Ten-year Treasuries have lost 1.1 percent this quarter, according to the Bank of America Merrill Lynch indexes. Notes with maturities between one and three years are on track to return 0.1 percent this quarter.
The Federal Reserve is weighing incoming data to judge when the world’s largest economy will be ready for borrowing costs to be raised. Reports Monday will show a rebound in personal-income growth and an acceleration in manufacturing output, according to economist surveys compiled by Bloomberg.
Even so, Citigroup Inc.’s Economic Surprise Index shows U.S. data are still falling short of expectations. The gauge was at minus 54.2 Friday, after falling to negative 73.3 in March, the lowest since 2011.
Investors should buy 30-year Treasuries as the Fed prepares to increase rates, London-based Royal Bank of Scotland Group Plc strategist Andrew Roberts wrote in an e-mailed report dated May 29.
“Goodness knows how far they rally if we really are about to see a hike while data weakens and there is no inflation,” Roberts wrote. The situation “shouts at you” to buy the securities, he wrote.
(An earlier version of this story was corrected to show the correct maturity on the benchmark Treasury note.)