2 Minute Read by Reuters Staff Reuters, SINGAPORE, July 8 – Longer-dated Treasuries continued their steep climb into an eighth straight session on Thursday, amid a risk-averse tone in financial markets and a shift in stance as investors see cracks in the recovery and the dangers of high inflation cooling. Benchmark 10-year rates have dropped about 5 basis points to 1.2750 percent, their lowest level since mid-February. The weekly drop is currently 14.6 basis points, which would be the largest in over a year if it continues. Treasury rates on the 20th and 30th years plummeted to their lowest levels since February, extending Wednesday’s gains, and the spread between two-year and 10-year yields narrowed to its smallest in five months. The price surge, which has pushed yields lower, began in late June with no evident catalyst, but has continued in the aftermath of the Federal Reserve’s hawkish shift in tone, which was confirmed by minutes released on Wednesday. “The Fed’s message remains that momentum is improving, necessitating a less dovish attitude,” TD Securities analysts wrote in a market note. “With a more proactive Fed, greater inflation is less likely, potentially keeping the curve flatter for the time being.” On Thursday, Chinese bonds jumped the most in over a year after China’s cabinet startled investors by announcing looser monetary policy, highlighting concerns about certain vulnerable spots in the world’s second-largest economy. The yield on ten-year Chinese government bonds decreased 6.6 basis points to below 3% for the first time since August. (Tom Westbrook contributed reporting, and Alex Richardson edited the piece.)/n
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