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Treasury bond yields plunge again as investors seek havens

March 16, 2011 | 11:18 am

Deepening fears about the nuclear crisis in Japan triggered another rush into U.S. Treasury bonds on Wednesday -- to the point where it interrupted planned purchases by the Federal Reserve Bank of New York.

Bond prices jumped, sending yields tumbling to new lows for the year, after European Energy Commissioner Guenther Oettinger was quoted as saying that the situation at Japan’s crippled Fukushima nuclear power complex was “out of control.”

Oettinger later backtracked on those comments, but that was too late to reverse the mini-panic he sparked in markets. Stocks sold off worldwide.

With Treasury bond prices spiking higher, the market volatility forced the New York Fed to extend the deadline for investors to submit bonds for purchase under the Fed’s ongoing buyback program.

5yr Treasury yields have plunged this week amid a surge of buying by investors seeking a haven as Japan’s nuclear crisis has worsened.

At about 11:15 a.m. PDT the yield on the five-year T-note (charted at left) was at 1.82%, down from 1.96% on Tuesday and the lowest since early December.

The 10-year T-note yield, a benchmark for mortgage rates, also slid to its lowest since early December, plummeting to 3.17% from 3.30% on Tuesday.

-- Tom Petruno

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