Treasuries Set for Two-Week Gain; Greenspan Warns of Global Risk

  • Foolish to think U.S. is isolated from world, Greenspan says
  • Surging Japanese yen highlights demand for perceived havens

Alan Greenspan on U.S. Productivity Slowdown

Treasuries headed for their biggest two-week gain since January as the Federal Reserve warned the global economy presents heightened risks.

U.S. government securities have returned 1.3 percent in the period, the biggest back-to-back weekly run since the period ended Jan. 15, based on Bloomberg World Bond Indexes. The Japanese yen has surged 11 percent this year, the most among the 16 most-traded currencies against the dollar, highlighting demand for perceived haven assets.

Former Fed Chair Alan Greenspan said Thursday U.S. policy makers have to take global developments into account. “The major problem that exists is essentially the issue that productivity growth over pretty much the spectrum of all economies has been under 1 percent a year for the last five years,” he said. Policy makers are concerned that slowing world growth will restrain U.S. exports, according to minutes of the Fed’s March meeting issued this week.

“The concern is the world economy,” said Kazuaki Oh’E, head of fixed income at CIBC World Markets Japan Inc. in Tokyo. “The Fed is saying they are going to be cautious. I personally think Treasuries are getting a little bit expensive.”

The benchmark Treasury 10-year note yield rose two basis points to 1.72 percent as of 6:45 a.m. in London, according to Bloomberg Bond Trader data. The 1.625 percent security due in February 2026 fell 7/32, or $2.19 per $1,000 face amount, to 99 6/32.

The yield was as low as 1.68 percent Thursday, a level not seen since Feb. 25.

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