Markets: News  

Treasurys gain on worries after Spain bailout

NEW YORK (MarketWatch) -- Treasury prices turned up on Monday, pushing yields down slightly, as Spain's request for a bailout came with many unanswered questions that left investors content to stay in assets deemed safer.

Yields on 10-year notes (10_YEAR) , which move inversely to their yields, fell 4 basis points to 1.59% after touching 1.73% in the overnight session. A basis point is one one-hundredth of a percentage point.

Yields on 30-year bonds (30_YEAR) slipped 3 basis points to 2.71%.

Five-year note yields (5_YEAR) declined 3 basis points to 0.69%.

Spain became the fourth euro-zone country to require international financial assistance on Saturday, asking the European Union for as much as 100 billion euros ($125 billion) in loans to help its struggling banking sector. Read more on Spain's bailout.

Beyond Spain, investors are wary about the uncertain outcome of elections on June 17 in Greece, and whether any party will win enough votes to decisively follow through on the country's existing austerity measures or demand renegotiations, which would risk the possibility of leaving the euro. Read more on Greece.

"It's clearly a 'show me' market for global investors and today's very modest selloff in Treasurys tells us that the deal struck this weekend gets only a one-handed clap from the markets," said Bill O'Donnell, head of Treasury strategy at RBS Securities.

The euro (EURUSD) turned lower on the same concerns about the lack of details in the bailout plan. U.S. stocks turned lower and Spanish bond yields turned up. Read more on euro, dollar.

Among Europe's longer-term plan should, many analysts say, be some form of join debt issuance, even if not a traditional euro bond. Read story on joint European bonds.

"For this news to permanently turn sentiment around, there needs to be a further rolling out of safety-nets across Europe," said George Goncalves, head of U.S. rates strategy at Nomura Securities.

"After weeks of tremors, it seems like the euro-zone architects get it and must be worrying over the long-term viability of the current structure of the euro," he said. "However, if we get a 'one and done' proclamation that this is all for now, expect markets to clamor for more, especially with Greek election uncertainty still ahead next week."