TREASURIES-Bonds up slightly as lower stocks ignite safety bid
October 4th, 2008 | by admin |* Safety bid for bonds as stocks shed gains, turn negative
* Traders “sell the fact” after bailout bill passage
* Weak jobs report adds to recession worries (Adds analysts’ comments, updates prices, changes byline)
By Chris Reese
NEW YORK, Oct 3 (Reuters) – U.S. Treasury debt pricesgained slightly on Friday as weaker stocks spurred somesafe-haven bidding on worries a U.S. bailout package may notunlock frozen credit markets and boost a slowing economy.
The U.S. House of Representatives on Friday afternoonpassed the landmark $700 billion financial bailout. Bonds thenpared strong losses and stocks turned negative in what analystscharacterized as classic “buy the rumor, sell the fact” trade.
Early in the day, the government posted the weakest jobsreport since March 2003, which many investors took as furtherevidence the U.S. economy is mired in recession.
“We are just following stocks,” said Ted Ake, executivedirector and head of bond trading with Mizuho Securities USA inNew York. “As stocks have given up all their gains, Treasurieshave given up … losses.”
Benchmark 10-year notes <US10YT=RR> traded 4/32 higher inprice for a yield of 3.61 percent from 3.63 percent late onThursday, while 2-year notes <US2YT=RR> gained 1/32 for a yield1.60 percent from 1.62 percent.
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