Institutional investors scoop up Treasuries

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Richard Beales and Michael Mackenzie in New York
Global government bond markets stabilised on Wednesday as suddenly higher yields prompted institutional investors such as insurers and pension fund managers to scoop up US Treasuries.
Treasury yields fell from highs above 5.32 per cent in early trade to 5.20per cent by late afternoon in New York - lower on the day, but still a quarter percentage point higher than a week ago.
The fall in yields came despite strong US retail sales data, which would normally push yields higher. Some analysts said the decline in yields on longer-dated bonds might be only a respite from the past week's sharp rise.
"It's not the end of the sell-off in bonds, but the market has stabilized and we have seen some buying from pension and insurance accounts," said Gerald Lucas, senior investment adviser at Deutsche Bank.
Signs of reduced bond buying interest on the part of Asian central banks and other foreign investors has been one factor behind the sell-off of US government bonds. But the sell-off pushed up yields and that attracted risk adverse investors who found the returns appealing.
Bond yields in the eurozone and UK fell back in afternoon trading but were higher on the day. The S&P 500 was up 1.5 per cent at 1,515.67. The FTSE Eurofirst 300 index closed 0.4 per cent higher at 1,580.52.
US retail sales rose 1.4 per cent in May, sharply higher than the forecast gain of 0.7 per cent. Excluding car and petrol sales, retail sales increased 1 per cent.
The tone of the data also led interest rate futures traders to start pricing in a small chance of a rate rise by the Federal Reserve this year - the first time further rises, rather than cuts, have been expected since the Fed stopped raising rates a year ago.