World Economy

US Treasuries Rise

US Treasuries RiseUS Treasuries Rise

US Treasuries are rallying in January for a third year in a row. The government securities have returned 1.8% this month, based on the Bloomberg US Treasury Bond Index. They rose 3% in January 2015 and 1.8% in January 2014, both the best monthly performances of those years.

US debt extended gains Friday and a rally in Japan’s bonds sent yields to record lows as the Asian nation’s central bank implemented a surprise interest-rate cut.

“Every year economists are really optimistic,” said Kim Youngsung, head of overseas investment at South Korea’s Government Employees Pension Service in Seoul. “But we didn’t meet our expectations. We have a good picture, but it’s really hard to beat the target. That’s why we’ve had a treasuries rally for the last 10 years.”

The January gains in US sovereign debt are occurring in tandem with an economic downtrend in the first quarters of both of the past two years. A government report Friday will show the pace of expansion slowed to 0.8% in the last three months of 2015, from 2% in the previous period, based on a Bloomberg survey of analysts. Plunging oil and stock prices are creating additional headwinds for the economy as 2016 begins.

Benchmark US 10-year note yields fell four basis points to 1.95% in London, based on Bloomberg Bond Trader data. The price of the 2.25% security due in November 2025 rose 10/32, or $3.13 per $1,000 face amount, to 102 23/32.

US government securities have advanced every year during the past decade except 2009 and 2013, based on Bank of America Corp. data.