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TREASURIES-U.S. Treasury yields fall after ECB announces bond purchases
January 22, 2015 / 3:01 PM / 3 years ago

TREASURIES-U.S. Treasury yields fall after ECB announces bond purchases

* U.S. yields fall; ECB purchases larger than expected
    * German bond yields fall to record lows

    By Karen Brettell
    NEW YORK, Jan 22 (Reuters) - U.S. Treasury prices rose on
Thursday after the European Central Bank announced more bond
purchases than expected in an effort to fight deflation and
kickstart growth in the region.
    The ECB said it would buy government bonds from this March
until the end of September 2016 despite opposition from
Germany's Bundesbank and concerns in Berlin that it could allow
spendthrift countries to slacken economic reforms.
 
    "It's pretty aggressive, slightly more than the market was
looking for," said Wilmer Stith, a fixed income portfolio
manager at Wilmington Trust in Baltimore.
    The bond purchases will further reduce the supply of
high-quality debt, which has supported long-dated Treasuries as
investors reach for higher yields. That is likely to continue to
support bonds even as investors also anticipate improving growth
and inflation that should eventually push yields higher.
    "It's bullish for Treasuries," said Kim Rupert, managing
director of Action Economics in San Francisco. "We've seen
record low yields in the periphery in Europe, and that will
provide an underpinning for Treasuries for widening spreads."
    Benchmark 10-year notes were last up 11/32 in
price to yield 1.83 percent, down from 1.94 percent before the
announcement. Thirty-year bonds gained 1-2/32 in
price to yield 2.41 percent, down from 2.54 percent.
    German 10-year government bond yields hit record
lows of 0.377 percent after the ECB press conference.

 (Additional reporting by Michael Connor; Editing by Lisa Von
Ahn)

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