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U.S. bond yields plunge as investors flood debt

U.S. bond yields plunge as investors flood debt
On Thursday August 18, 2011, 11:10 am
By Karen Brettell

NEW YORK (Reuters) – U.S. Treasury prices soared on Thursday and benchmark 10-year note yields fell below 2 percent for the first time as global economic fears sent investors scrambling to safe haven government debt.

U.S. bond buying intensified after data showed that factory activity in the Mid-Atlantic region plummeted in August while sales of U.S. existing homes unexpectedly dropped in July.

The data added to concerns that the U.S. economy will head back into recession at the same time as the country’s rising debt load and record deficit leaves the government and the Federal Reserve with fewer options to stimulate the economy.

“It looks pretty bad across the board,” said Gus Faucher, director of macroeconomics at Moody’s Analytics in West Chester, Pennsylvania.

The data sparked a frenzy of buying that sent benchmark 10-year note yields as low as 1.97 percent, smashing through the previous low yield of 2.038 percent.

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