By Sandra Hernandez and Deborah Finestone
Nov. 17 (Bloomberg) -- Treasuries rose to the highest since 2005 as credit-market losses related to delinquent subprime mortgages drove investors to the safety of government debt.
Two-year notes gained for a fifth straight week, extending their rally to the longest in eight months on speculation the Federal Reserve will cut borrowing costs a third time this year. The Fed will release minutes of its October meeting next week, and the Commerce Department is expected to report that housing starts fell to the lowest since 1993.
``The market's pricing in an easing by the Fed,'' said Anne Briglia, senior fixed-income strategist in New York at UBS Wealth Management Research. ``Price action is being driven by institutional investors who are acutely aware of the broader financial stresses here.''
The two-year note's yield fell 8 basis points, or 0.08 percentage point, to 3.34 percent this week, according to bond broker Cantor Fitzgerald LP. It reached 3.28 percent yesterday, the lowest since February 2005. The price of the 3 5/8 percent security due in October 2009 rose 1/8, or $1.25 per $1,000 face amount, to 100 17/32. Yields move inversely to bond prices.
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