Thursday, June 19, 2008

Treasuries Advance After Moody's Cuts MBIA, Ambac Debt Ratings

By Wes Goodman

June 20 (Bloomberg) -- Treasuries rose, heading for a weekly gain, after Moody's Investors Service stripped bond insurers MBIA Inc. and Ambac Financial Corp. of their Aaa ratings.

Two-year notes advanced for the third time in four days after traders scaled back forecasts for how soon the Federal Reserve will start raising interest rates.

``There's still an underlying demand due to fears of credit blowing up again,'' said Edward Lee, a fixed-income strategist in Singapore at Standard Chartered Plc, a U.K. lender focused on emerging markets. ``Rate hikes are not on the cards.''

The two-year note yield fell 2 basis points to 2.93 percent as of 9:45 a.m. in Tokyo, according to bond broker BGCantor Market Data. The price of the 2.625 percent security due in May 2010 rose 1/32, or 31 cents per $1,000 face amount, to 99 14/32.

The yield declined 11 basis points this week. A basis point is 0.01 percentage point.

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