By Burton Frierson
NEW YORK, May 14 (Reuters) - U.S. government bonds rallied on Friday, sending 10-year notes up a point in price as persistent worries over the euro zone's debt crisis led investors to ditch stocks for the safer harbor of Treasuries.
The bond market shrugged off data showing a bigger-than-expected rise in April U.S. retail sales, focusing instead on the slumping euro, which fell to an 18-month low against the dollar under $1.24.
Bond investors have paid more attention to the euro in recent weeks, taking its slide as a sign of diminishing confidence in Europe's 11-year-old experiment with a single currency.
The worries have persisted despite the $1 trillion initiative worked out last weekend aimed at stanching the crisis, which began in Greece and has threatened to spread throughout the euro zone's fiscally troubled members.
'It's a general push for dollars,' said Steven Ricchiuto, chief economist at Mizuho Securities USA Inc. '$1.25 was a big level, and we've broken through it handily. That set off the flight-to-quality trade.'
The benchmark 10-year note rose a point in price before backing off a touch. It was last up 28/32 in price, pushing the yield down to 3.43 percent from Thursday's close of 3.54 percent.
Five-year notes rose 16/32 in price, pushing yields down to 2.14 percent from Thursday's close of 2.25 percent.
Major stock indexes in the United States fell, with the Standard & Poor's 500 down 2.27 percent as Europe's crisis of confidence hurt demand for riskier assets that perform well during times of economic growth and financial stability.
Economic reports showed a stronger-than-expected increase in U.S. industrial output last month, while consumer sentiment this month was slightly below forecast.
Analysts said investors were overlooking the data and focusing on fear and uncertainty over Europe's troubles and what they might mean for global markets and the economy.
'There are very real risks in Europe and at least at this point it's safer to be in U.S. Treasuries,' said Sergey Bondarchuk, U.S. interest rate strategist with BNP Paribas in New York.
'That's the backdrop that's driving the U.S. market. It's more of a flight-to-quality trade than based on fundamentals.'
(Editing by Leslie Adler) (burton.frierson@thomsonreuters.com;+1 646-223-6292; Reuters Messaging: burton.frierson.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, May 14 (Reuters) - U.S. government bonds rallied on Friday, sending 10-year notes up a point in price as persistent worries over the euro zone's debt crisis led investors to ditch stocks for the safer harbor of Treasuries.
The bond market shrugged off data showing a bigger-than-expected rise in April U.S. retail sales, focusing instead on the slumping euro, which fell to an 18-month low against the dollar under $1.24.
Bond investors have paid more attention to the euro in recent weeks, taking its slide as a sign of diminishing confidence in Europe's 11-year-old experiment with a single currency.
The worries have persisted despite the $1 trillion initiative worked out last weekend aimed at stanching the crisis, which began in Greece and has threatened to spread throughout the euro zone's fiscally troubled members.
'It's a general push for dollars,' said Steven Ricchiuto, chief economist at Mizuho Securities USA Inc. '$1.25 was a big level, and we've broken through it handily. That set off the flight-to-quality trade.'
The benchmark 10-year note rose a point in price before backing off a touch. It was last up 28/32 in price, pushing the yield down to 3.43 percent from Thursday's close of 3.54 percent.
Five-year notes rose 16/32 in price, pushing yields down to 2.14 percent from Thursday's close of 2.25 percent.
Major stock indexes in the United States fell, with the Standard & Poor's 500 down 2.27 percent as Europe's crisis of confidence hurt demand for riskier assets that perform well during times of economic growth and financial stability.
Economic reports showed a stronger-than-expected increase in U.S. industrial output last month, while consumer sentiment this month was slightly below forecast.
Analysts said investors were overlooking the data and focusing on fear and uncertainty over Europe's troubles and what they might mean for global markets and the economy.
'There are very real risks in Europe and at least at this point it's safer to be in U.S. Treasuries,' said Sergey Bondarchuk, U.S. interest rate strategist with BNP Paribas in New York.
'That's the backdrop that's driving the U.S. market. It's more of a flight-to-quality trade than based on fundamentals.'
(Editing by Leslie Adler) (burton.frierson@thomsonreuters.com;+1 646-223-6292; Reuters Messaging: burton.frierson.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.