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Follow on Google News | Cornerstone Worldwide: US Treasurys Rise On GSEs - Financial NewsCornerstone Worldwide: Flight to safety continues as Freddie & Fannie plunge on bailout worries
By: Richard Drake 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. End
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