Italy’s inconclusive election triggered renewed market convulsions over Europe’s debt crisis as recession-scarred voters repudiated budget rigor and established former comedian Beppe Grillo as a political force.
Britain lost its top credit rating by Moody’s Investors Service, which cited the continuing weakness in the nation’s growth outlook and the challenges that presents to the government’s fiscal consolidation program.
Investors from London to Tokyo to Pittsburgh are plowing money back into Treasuries after the biggest decline in 19 months, betting that even an improving global economy won’t ignite a bear market in bonds.
Jay Mueller, who manages $3 billion of bonds for Wells Capital Management in Milwaukee, resisted buying Treasuries for four months, anticipating the Federal Reserve would drop its pledge to keep interest rates at a record low through late 2014.
Treasuries rallied, pushing five-, seven- and 10-year yields to record lows, amid concern the European debt crisis is widening and as data showed the U.S. economic expansion slowed during the first quarter.
Longer-maturity bonds account for the greatest share of issuance in three months as companies take advantage of record-low borrowing costs and investors’ expectations that inflation will stay low in a slowing recovery.