Treasuries were steady and yields held the biggest weekly drop in two months after the U.S. and the European Union warned Russia it will face sanctions if it annexes Crimea following a referendum there.
Demand for U.S. sovereign bonds was sustained as President Barack Obama signed an executive order authorizing financial sanctions while EU foreign ministers meet today to decide on asset freezes and visa bans. The Federal Reserve plans to purchase $2.25 billion to $2.75 billion of debt maturing from December 2019 through February 2021 today. Gains were capped before the Fed is forecast to cut its monthly bond purchases to $55 billion at a two-day meeting beginning tomorrow.
“Investors are probably still short, so positioning and momentum indicators certainly suggest that the rally can continue,” said Skye Masters, the head of interest rate research at National Australia Bank Ltd. in Sydney, referring to speculative bets for declines in Treasuries. “The referendum going through suggests that the risk is the market will be lower in yield initially, but we question whether it can sustain or add to that move.”
Benchmark 10-year yields were at 2.66 percent as of 6:58 a.m. in London after dropping 13 basis points last week, the most since the period ended Jan. 10, Bloomberg Bond Trader data showed. It touched 2.61 percent on March 14, the lowest since March 4. The price of the 2.75 percent note due February 2024 was little changed at 100 3/4.
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