Treasuries Rise Most in Two Weeks on Dubai’s Debt Payment Delay

Treasuries rose the most in almost two weeks after a Dubai proposal to delay debt payments set off a slide in stocks and higher-yielding assets worldwide.

Ten-year Treasury yields fell toward the lowest level in seven weeks as the yen strengthened to a 14-year high versus the dollar, boosting speculation the Bank of Japan will intervene in the currency markets. Treasuries headed for a third weekly gain on speculation the Federal Reserve will avoid raising interest rates until the third quarter of next year. U.S. markets were closed yesterday for the Thanksgiving holiday.

“The Dubai issue has caused a flight-to-quality move, which is positive for Treasuries,” said Hiromasa Nakamura, a senior investor in Tokyo at Mizuho Asset Management Co., which oversees the equivalent of $21 billion and is part of Japan’s second-largest bank. “The Fed will keep low interest rates for a long time due to low inflation and the continuing credit crunch. That’s supportive for shorter-zone Treasury notes.” (more)