Treasury Yields Near Lowest This Year, Australian Bonds Gain

May 19 (Bloomberg) -- Treasury yields were near the lowest level in 2010 after the euro slid to a four-year low and stocks declined, bolstering demand for the safest securities.

U.S. bonds held yesterday’s biggest gain in a week as investors snapped up dollars after Germany said it will ban naked short sales of European government debt and 10 financial companies. Australian and Japanese bonds advanced, while the cost rose to protect Asia-Pacific corporate and sovereign bonds.

“Investors will transfer money from Europe to U.S. Treasuries,” said Hiromasa Nakamura, who helps oversee the equivalent of $20.7 billion as a senior investor at Mizuho Asset Management Co. in Tokyo. “The safe haven is the U.S. dollar. There is room for Treasury yields to decline.”

The yield on the benchmark 10-year note was 3.35 percent at 1:09 p.m. in Tokyo, according to BGCantor Market Data. The 3.5 percent security due May 2020 traded at a price of 101 1/4.

Ten-year notes climbed as much as 1/4 point, or $2.50 per $1,000 face amount, as the euro fell as low as $1.2144, the weakest level since April 2006.

Government securities gave up their gains as the euro recouped losses to trade little changed against the dollar.

MSCI’s Asia Pacific Index of shares slid 1.3 percent, slumping for a fourth day.

Former Federal Reserve Chairman Paul Volcker said it will take “years” to restore economies in Europe following the region’s debt crisis, speaking yesterday with Tom Keene on Bloomberg Radio.

Mizuho Asset shifted funds to Treasuries from euro bonds at the end of April, Nakamura said.