Interest rates fall on concern about Greek debt

Interest rates fall on concern about Greek debtInterest rates fell in the bond market Thursday after concerns grew that a bailout for Greece might not be enough to help the country through its fiscal crisis.

Renewed questions about the Greek government’s ability to make its debt payments have pushed its borrowing costs higher. Investors outside Greece don’t want problems there to spill to other markets. That drove up demand for Treasurys.

Prices on Treasurys rose and yields dropped.

The Greek government on Thursday asked the European Union and the International Monetary Fund for greater insight about potential financial aid. Officials from the EU and the IMF are scheduled to meet with Greek leaders on Monday.

Mixed news on jobs and manufacturing in the U.S. offered investors little new insight into the economy.

The yield on the benchmark 10-year Treasury note maturing in February 2020 fell to 3.84 percent in late trading from 3.87 percent Wednesday. Its price rose 7/32 to 98 8/32. The 10-year yield is tied to rates on mortgages and other consumer loans.

Last week, the 10-year yield reached 4 percent after government debt auctions dumped more supply in the market. Increased expectations that the economy is rebounding also hurt demand.

Mario De Rose, fixed income strategist at Edward Jones in St. Louis, said the Treasury market is trading in a range because investors still have concerns about the strength of the recovery but too little information to steer the market in any one direction.

“The market is really looking for something and it may not get it for quite a while,” De Rose said.

He said investors will continue to focus on the government’s monthly employment figures and comments from the Federal Reserve about interest rate policy.

Investors looked past the Treasury Department’s report Thursday that China reduced its holdings of U.S. Treasury debt for a fourth straight month in February. China’s holdings fell 1.3 percent, dropping $11.5 billion to $877.5 billion.

Interest rates fall on concern about Greek debtBorrowing costs could climb for the government as well as for businesses and consumers if foreign governments pare their purchases of U.S. debt. That also would make it more expensive for U.S. government to pay down its existing deficits.

In other economic news, the Labor Department said initial claims for unemployment benefits rose rather than fell last week as analysts had expected. First-time claims for jobless benefits rose by 24,000 to 484,000, the highest level since late February.

The Federal Reserve said industrial production rose 0.1 percent in March. That was below the 0.7 percent increase analysts had predicted.

Regional manufacturing reports from the New York Federal Reserve and the Philadelphia Federal Reserve signaled that factories are churning out more goods.

In other trading, the yield on 30-year bond that matures in February 2040 fell to 4.72 percent from 4.73 percent. Its price advanced 7/32 to 98 15/32.

The yield on the two-year note that matures in March 2012 fell to 1.02 percent from 1.06 percent, while its price rose 2/32 to 99 31/32.

The yield on the three-month T-bill that matures July 15 was flat at 0.15 percent while its discount rate was 0.16 percent.