Treasury prices gained ground Tuesday, pushing yields to the lowest in nearly a month, as losses at UBS and write-offs at J.P. Morgan Chase raised speculation that the credit crisis that started a year ago has yet to bottom.
Ten-year note yields (UST10Y) fell seven basis points, or 0.07%, to 3.93%, the lowest since July 15. Bond prices and yields move in opposite directions.
"There's clearly a little more concern in the markets as far as weakness in the economy, and financials are driving that," said Mario De Rose, fixed-income strategist at Edward Jones. "That's causing weakness in stocks, and bonds are the alternative."
Beleaguered Swiss bank UBS (UBS) reported a second-quarter loss of 358 million francs ($331 million) and said it would restructure by separating its investment-banking and wealth-management arms after nervous clients withdrew more cash. The latest loss included about $5.1 billion of further write-downs, offset in part by a sizable tax credit.
J.P. Morgan (JPM) had to take a $1.5 billion write-off on mortgage-backed securities and loans, the company said in a Securities and Exchange Commission filing late Monday.
"UBS' dire outlook for credit markets in the second half of 2008 along with J.P. Morgan's write-downs ... underpinned the Treasury bid," Roseanne Briggen, Treasury analyst at Informa Global Markets, wrote in an email.
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