Treasurys post weekly gain as Crimea vote looms

NEW YORK (MarketWatch) — Treasury prices edged down Friday but posted a weekly advance as Ukraine worries have boosted safety plays.

The benchmark 10-year Treasury note (10_YEAR)  yield, which moves inversely to price, edged up 1 basis point to 2.655%. For the week, the yield is showing a drop of nearly 14 basis points.

The 30-year bond (30_YEAR)  yield was up nearly 1 basis point to 3.597%, while the 5-year note (5_YEAR) yield rose 1 basis point to 1.534%.

U.S. Secretary of State John Kerry met on Friday with Russian Foreign Minister Sergei Lavrov in London, as the clock ticks down on a Sunday referendum in Crimea, which will vote on whether to leave Ukraine and become part of Russia.

In comments after the meeting, Lavrov said Russia has the legal right to annex Crimea, while Kerry repeated that the referendum is illegal and the U.S. won't recognize the results.

Reuters Enlarge Image Pro-Russian demonstrators take part in a rally in the eastern Ukrainian city of Donetsk, which is mainly Russian-speaking. REUTERS/Stringer

"Everybody is waiting to see what happens in the Ukraine over the weekend," said Ian Lyngen, senior rates strategist at CRT Capital Group. He said the market was in "a bit of a holding pattern" on Friday. Read more: What Sunday's Crimea vote means for markets

Regarding the weekly gain for Treasury prices, Lyngen told MarketWatch that it was a "bullish retracement" of some of the weakness seen in the prior week, which featured a better-than-expected monthly jobs report. Last week, the 10-year note yield rose 13 basis points.

In U.S. economic news on Friday, the Labor Department said a producer-price index fell 0.1% in February, missing forecasts for a 0.2% increase and marking the first decline in three months. In addition, a gauge of consumer sentiment declined more than expected.

Beyond Ukraine worries, traders are awaiting next week's Federal Reserve meeting, which will be Janet Yellen's first as head of the central bank. The Fed is widely expected to continue tapering its bond-buying program, and it also could change its approach to setting guidance. Read more: Former Fed official on how and why guidance will change

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