Treasuries Gain as Growth Slows, Pushing 2-Year Note Yields to Record Low

Treasuries climbed, pushing two-year note yields to the lowest ever, as a government report showing U.S. economic growth slowed in the second quarter spurred demand for the world’s safest securities.

U.S. notes headed for a fourth monthly gain. Economic expansion cooled to a 2.4 percent annual pace last quarter, lower than forecast, Commerce Department data showed. Federal Reserve Bank of St. Louis President James Bullard said yesterday the central bank should resume purchases of Treasury securities if the economy slows and prices fall.

“There continue to be very strong headwinds in the economy,” said Larry Dyer, a U.S. interest-rate strategist at HSBC Holdings Plc in New York, one of 18 primary dealers that trade with the Fed. “That -- along with the Bullard paper, which highlighted the potential for more quantitative easing -- gives a bullish tone to the market.”

The two-year yield dropped three basis points, or 0.03 percentage point, to 0.56 percent at 1:55 p.m. in New York, according to BGCantor Market Data. It touched a record low 0.5461 percent. The price of the 0.625 percent security due in July 2012 rose 2/32, or 63 cents per $1,000 face amount, to 100 1/8. Ten-year note yields tumbled eight basis points to 2.90 percent.

Two-year yields declined three basis points this week and five basis points in July. The 10-year note yield dropped nine basis points this week and three basis points this month. The 30-year bond headed for its first monthly loss since March, its yield rising nine basis points to 3.98 percent.

Read more: http://www.bloomberg.com/news/2010-07-30/treasury-two-year-notes-rise-head-for-monthly-advance-before-gdp-report.html

It's time to impose austerity programs!!!!!1

:crazy: