RTRS: TREASURIES-Bonds firm as Japan's woes fuel recession fear
By Richard Leong
NEW YORK, Nov 17 (Reuters) - U.S. government debt prices were steady to higher on Monday, as a recession in Japan and a grim outlook for the United States fuelled fears of a global recession, supporting safe-haven demand for government bonds.
Data on Monday showed Japan's economy shrank 0.1 percent in the third quarter, sending the world's second-biggest economy into its first recession in seven years. [ID:nT366159].
The situation is no better on the other side of the Pacific where the United States, the No. 1 world economy, last month reported its sharpest contraction in seven years.
"We see a lot of negative expectations so the data should be supportive of Treasury prices throughout the week," said Marty Mitchell, head of government bond trading at Stifel Nicolaus & Co. in Baltimore, Maryland.
The New York Federal Reserve reported on Monday its index on manufacturing in New York state fell to a record low of minus 25.43 in November from minus 24.62 in October. The figure was not as weak as what analysts had expected. For more, see [ID:nNAT004573]
With data on the U.S. economy generally weak, the bond market shrugged off news that U.S. industrial output was stronger than expected in October. This report from the Federal Reserve also showed that September output was revised down to show its biggest fall in more than 62 years.
The bleak picture, led by the world's two biggest economies, led the G20 countries this weekend to agree to take rapid action, including fiscal stimulus, as needed in a bid to stabilize financial markets and restore growth. But a lack specific steps disappointed the market. See [ID:nN15469487].
"This was a poor effort where the team turned up but did little else except chat," BNP Paribas economists wrote in a research note.
The price on benchmark 10-year notes was up 5/32 at 100-10/32. Their yield, which moves inversely to the price, was 3.71 percent, down from 3.73 percent late on Friday.
Two-year notes were unchanged in price with yields holding at 1.22 percent.
U.S. stock index futures traded lower, suggesting a weak market open. The Standard & Poor's 500 index futures SPc1 were down 9.60 points or 1.1 percent. For more, see [.N]
Adding to the economic worries was evidence the global money market may be floundering after improving for a month in reaction to the massive measures conducted by central banks to unlock credit for cash-strapped borrowers.
The three-month dollar London Interbank Offered Rate , a global rate benchmark, rose for a third straight session to 2.23875 percent on Monday. See [ID:nLH119859]
Among other Treasury maturities, five-year notes was unchanged in price to yield 2.32 percent, while the 30-year bond was up 18/32 with its yield falling to 4.20 percent from 4.23 percent on Friday.
