U.S., Japan Bonds Rise After Dallas Shooting in Flight to Safety

  • Shooting amplifies demand for havens, Capital Asset says
  • Payrolls are due after May job gain fell short of expectations

U.S. and Japanese bonds rose, sending the yield on the Asian benchmark to a record low, after snipers killed four police officers and injured seven others at a protest in Dallas.

“There’s a whole flight to quality,” said Toshifumi Sugimoto, chief investment officer in Tokyo at Capital Asset Management. “There’s political turmoil in the U.S. People are scared."

Treasuries also rose as investors prepared for the U.S. jobs report Friday, after last month’s data for May showed a smaller-than-expected gain of 38,000. June’s gain will jump to 180,000, according to a Bloomberg survey of economists. Treasury yields dropped to a record earlier this week as the U.K. vote to leave the European Union drove demand for the safest assets.

Treasury 10-year note yields declined three basis points to 1.36 percent as of 6:50 a.m. in London, according to Bloomberg Bond Trader data. The record low was 1.318 percent. The price of the 1.625 percent security due in May 2026 rose 9/32, or $2.81 per $1,000 face amount, to 102 15/32.

Japan’s 10-year yield slid to an unprecedented minus 0.3 percent.

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The protests in Dallas were among several across the country held after a Minnesota officer on Wednesday fatally shot Philando Castile while he was in a car with a woman and a child in a St. Paul suburb, according to an Associated Press article. The aftermath of the shooting was played in a Facebook video. 

A day earlier, Alton Sterling was shot in Louisiana after being pinned to the pavement by two white officers. That, too, was captured on a mobile phone video, the AP reported.

“We did see a rally in Treasuries as news filtered through of the unfortunate shootings in Dallas,” said Peter Jolly, the head of market research at National Australia Bank Ltd. in Sydney. “It has that flight-to-quality, uncertainty, aspect to it.”

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