Cornerstone Worldwide: US Treasurys Rise On GSEs - Financial News

Cornerstone Worldwide: Flight to safety continues as Freddie & Fannie plunge on bailout worries
By: Richard Drake
 
Sept. 6, 2008 - PRLog -- Cornerstone Worldwide cited worries over the bailout of mortgage giants Freddie Mac and Fannie Mae as the catalyst for increasing demand for U.S. Treasury debt. Prices rose for a third straight session, taking benchmark yields to one-month lows as weaker stocks ignited safe-haven bidding for lower-risk government debt.

An unnamed source with knowledge of research at Cornerstone Worldwide added that falling energy prices also boosted bonds by easing expectations the Federal Reserve will eventually have to raise interest rates to combat inflation.

Mounting concerns about the health of financial companies encourages the flight-to-quality bid for Treasurys.

The benchmark 10-year Treasury was trading 8/32 higher in price for a yield of 3.82 percent -- the lowest since July 16 -- from 3.85 percent late Friday. Two-year notes were 2/32 higher for a yield of 2.36 percent from 2.40 percent.

The National Association of Home Builders' gauge of homebuilder optimism for August was the only significant data scheduled for release on Monday.

The highlight event this week is expected to be on Friday, when US Federal Reserve Chairman Ben Bernanke speaks on financial stability as part of a convention in Jackson Hole, Wyo.

Cornerstone Worldwide said stocks were impacted on Monday by mounting fears over the potential for more losses from the mortgage crisis. Shares of U.S. home finance giants Fannie Mae and Freddie Mac were trading 20 percent lower in price after reports that the U.S. Treasury is increasingly likely to recapitalize the two companies, a move that would dilute the value of stock holdings. Cornerstone Worldwide were rumored to be buying stock in both companies in preparation for a rally but no confirmation was forthcoming.
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Source:Richard Drake
Email:Contact Author
Zip:E145LB
Tags:Cornerstone Worldwide, Cornerstone, Worldwide
Industry:Financial
Location:London City - London, Greater - England
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