* Benchmark yields reach 50-year lows in safe-haven buying
* Global equity rout adds to safe-haven bid for bonds
* Investors question how much further yields can fall
By Chris Reese
NEW YORK, Dec 1 (Reuters) - U.S. Treasury debt prices rose
on Monday in safe-haven buying that took benchmark yields to
the lowest in 50 years as investors continue to fret over the
skidding world economy.
U.S. stock futures fell on Monday morning, after a global
equity rout that hit stocks in Asia and Europe, spurring
investors to once again turn to lower-risk government debt.
"The bond market is just off record highs given concerns
that the recession could be deep and long lasting and ongoing
safe haven demand for Treasuries," said Action Economics LLC
said in a note to clients.
Benchmark 10-year Treasury notes were trading 22/32 higher
in price for a yield of 2.85 percent from 2.92 percent late on
Friday. The yield, which moves inversely to prices, reached
down to 2.83 percent, marking the lowest in at least five
decades.
The 2-year note was trading 3/32 higher in price for a
yield of 0.96 percent, down from 1.01 percent late on Friday
and below the Federal Reserve's target rate for overnight
lending between banks of 1.00 percent.
"Stocks have taken it on the chin this morning after a nice
run last week and back-end Treasury yields have forged new
all-time lows this morning too," said William O'Donnell, head
of U.S. interest rate strategy at UBS Securities in Stamford,
Connecticut.
But some investors cautioned U.S. Treasury yields may be
running out of room to fall further, after being taken to
record levels by investor need for low-risk assets in a
flagging global economy and a persistent credit crisis.
"We have growing concerns, expressed ... for some weeks
now, that the crowd in Treasuries is getting too thick,"
O'Donnell said.
Still, investors expect the Fed to continue to cut
benchmark rates, with fed fund futures implying a 74 percent
chance the central bank will slash its target rate by 50 basis
points at a meeting on Dec. 16.
Investors are waiting for a speech from Fed Chairman Ben
Bernanke on Monday for clues as to the direction of U.S.
monetary policy and programs intended to prop up the financial
industry.
Bernanke is scheduled to speak at about 1:30 p.m. (1830
GMT).
Five-year Treasury notes were trading 11/32 higher in price
for a yield of 1.84 percent from 1.92 percent late on Friday,
while the 30-year bond was trading two points higher for a
yield of 3.34 percent from 3.44.
(Editing by James Dalgleish)
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