Treasuries Fall With Australian Bonds as Greece Damps Safety Bid

Men of Value Contributor · July 10, 2015

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Map of Australia with Australian flag passport and money cash dollar notes and coins.

(Bloomberg) — U.S. and Australian government bonds fell for a second day as Greece sought a bailout loan, curbing demand for safer assets.

Ten-year Treasury prices extended Thursday’s biggest decline in two months after Greece offered creditors a package of reforms and spending cuts, as it seeks to keep its place in the euro currency union. A rally in Chinese shares Thursday fueled optimism a rout in the stock market is ending, further sapping demand for haven assets.

“It’s a combination of Greece and Chinese equities,” said Peter Jolly, head of market research at National Australia Bank Ltd. in Sydney. “There’s been a relief trade in the past 24 hours.”
The benchmark U.S. 10-year yield rose two basis points to 2.35 percent as of 10:47 a.m. Tokyo time, according to Bloomberg Bond Trader data. The price of the 2.125 percent note due in May 2025 fell 7/32, or $2.19 per $1,000 face amount, to 98 2/32.

The yield jumped 13 basis points Thursday, the most since May 11.
Australian 10-year yields climbed 13 basis points to 2.94 percent, and Japan’s increased half a basis point to 0.45 percent.

Investors snapped up government bonds earlier this week because of Greece and China. Samsung Asset Management says it’s too soon to say turmoil in the nations is over.

‘Sharp Decline’

“Doubts about Greece and the Chinese market will last through the end of the month,” said Wontark Doh, the company’s head of overseas fixed-income investment in Seoul. “The sharp decline in U.S. Treasury prices will not last.”

The Greek government sought a three-year bailout loan of at least 53.5 billion euros ($59.3 billion) in a final effort to keep the country in the euro. In exchange, it offered a package of reforms and spending cuts similar to those presented by creditors last month.

The Shanghai Composite Index has jumped 11 percent in the past two days after sliding more than 30 percent from its peak in June.

Even after Thursday’s selloff, U.S. government securities are still up 0.5 percent this week, according to the Bloomberg U.S. Treasury Bond Index. The gauge is up 0.3 percent this month, rebounding from declines in April, May and June.

To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net To contact the editors responsible for this story: Tomoko Yamazaki at tyamazaki@bloomberg.net Nicholas Reynolds

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Men of Value Contributor

Articles by various contributors to Men of Value, an online magazine for American men who value our Judeo-Christian values of faith, family, and freedom.