US investors look to government bonds

US investors are turning to the safety of Treasury bonds, reports have suggested.

Yesterday (May 20th), reports from the US said that investors dumped risky assets like equities and put their money into government debt.

The move came after oil prices reached record levels and fears mounted about a further fall in consumer spending.

As a result, Benchmark ten-year Treasury notes rose 12/32 to 100 26/32 and yielded 3.78 per cent, down from 3.83 per cent earlier in the week.

In addition, two-year notes traded 5/32 higher in price.

Talking to the Reuters news agency, Kim Rupert, managing director of global fixed-income analysis at Action Economics, explained: "Equities have obviously been weaker all day and extended declines throughout the session, so you have been seeing an asset-allocation trade back into bonds."

In an interview with the Associated Press, Tom di Galoma, head of government bond trading at Jefferies & Co, added: "Anytime stocks get down more than 150 or 200 points market participants just start grabbing Treasurys."