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US Debt Prices Little Changed After GDP Report
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The prices of U.S. Treasury securities were little changed on Friday, after a weaker than expected reading of U.S. gross domestic product growth rekindled a safety bid.
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The U.S. economy grew at its fastest pace in 1 1/2 years in the fourth quarter, but a strong rebuilding of stocks by businesses and weak spending on capital goods hinted at slower growth in early 2012.
“The GDP
![[cnbc explains]](http://media.cnbc.com/i/CNBC/Sections/News_And_Analysis/_News/_CNBC_EXPLAINS/_IMAGES/CNBC_explains_icon1.gif)
print wasn't exactly very inspiring,” said Gennadiy Goldberg, interest rate strategist at 4Cast Inc. in New York. “A lot more of the growth came from inventory building than the market had expected. It was not a positive factor for risk at this point.”
The report also indicated that growth might not continue even at its current slow pace in the quarters to come.
“Personal consumption is not gaining momentum and the methods the consumer has used to keep the momentum going over the last few quarters is — we hope — expected to fade,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York. “It has mainly been savings and credit usage, and when you're going through a deleveraging process that is not a good thing to see.”
But the rally in Treasurys was dampened by some optimism that a Greek debt swap deal would be announced soon, as well as the fact that Treasury yields
were already painfully low.
William O'Donnell, head of U.S. rates strategy at RBS Securities in Stamford, Conn., said in a note to clients he thought Treasurys were running up against barriers to lower yields because investors could not give up more potential to earn returns than they already had, despite a pledge by the Federal Reserve to keep rates “exceptionally low” for the coming three years.
“This is a clear warning that even the most strident bulls are getting rate vertigo at current levels and that chasing prices from current levels is a very dangerous game,” O'Donnell said.
Benchmark 10-year Treasury notes were last trading 3/32 higher in price and yielding 1.93 percent, down from 1.94 percent late on Thursday. The 30-year Treasury bond down 4/32 in price for a yield of 3.10 percent, unchanged from Thursday's close.
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Data is a real-time snapshot *Data is delayed at least 15 minutes
