Treasuries Benefit as Brussels Explosions Spur Safety Demand

New York (Mar 22)  Treasuries advanced with their peers from Germany to the U.K. as a series of explosions ripped through the Brussels airport departure hall and a downtown subway station on Tuesday morning, sparking demand for the safest government securities.

U.S. bonds pared this month’s drop as Belgium’s military sent reinforcements to the capital after two bombs went off in rapid succession at the airport around 8 a.m. local time, the peak check-in hour for morning flights within Europe. RTL news reported as many as 13 dead and 25 injured. An hour later, an explosion hit a subway station a short walk from European Union headquarters.

Benchmark Treasury 10-year note yields fell one basis point, or 0.01 percentage point, to 1.90 percent as of 7 a.m. New York time, according to Bloomberg Bond Trader data. The 1.625 percent security due in February 2026 rose 1/8, or $1.25 per $1,000 face amount, to 97 1/2.

There’s a “flight to safety in foreign-exchange and rates after the explosions,” said Richard Kelly, head of global strategy at Toronto Dominion Bank in London. “The attacks heighten the uncertainty for now.”

Treasuries handed investors a loss of 0.7 percent in March through Monday, trimming this year’s return to 2.3 percent, based on the Bloomberg World Bond Indexes. The U.S. economy is showing signs of improvement, supporting the case for the Federal Reserve to increase interest rates this year. An industry report Tuesday will show a gauge of manufacturing rose in March, according to a Bloomberg survey of economists.

Source: Bloomberg