Treasury 30-Year Price Ends Sharply Higher As Traders Scramble to Reverse Hedge Positions
NEW YORK -- Price swings and odd price movements returned to the bond market after two days of relative normalcy, as investors scrambled to buy longterm Treasurys and traders sought to reverse so-called hedges, pushing longterm Treasury prices higher.</br></br>In late trading, the 30-year Treasury bond was up 1 13/32, or $14.0625 for a bond with a $1,000 face value, at 98 15/32. The bond's yield, which moves inversely to the price, fell to 6.230% from 6.337%.</br></br>But 10-year Treasury notes, quickly becoming the benchmark of the bond market, rose just 5/32 to yield 6.609%. And two-year Treasurys were unchanged, yielding 6.665%.</br></br>Investors and traders who sold short Treasurys in recent months, or borrowed and sold these securities as part of a hedging strategy aimed at protecting other bond investments, scrambled to buy back Treasurys yesterday, traders said, forcing prices higher.</br></br>"There's more dislocation in the market as more hedges are unwound," or reversed, said Scott Graham co-head of government-bond trading at Prudential Securities. "It will take more than a few days to get through it all."