NEW YORK: US Treasuries prices fell on Monday as investors made room for the upcoming $26 billion of two-year notes, part of this week's $90 billion in fixed-rate government debt supply.
The decline in bond prices was modest as traders were reluctant to make big bets ahead of the two-day Federal Reserve policy meeting that begins on Tuesday.
Analysts expected no change in policy stance from the Federal Open Market Committee as recent domestic data have been weaker than forecast and a strong dollar has crimped export activities.
"I expect the Fed to do nothing. I don't think the data are there for them to be tweaking things," said Brian Rehling, chief fixed-income strategist at Wells Fargo Advisors in St. Louis, Missouri.
The US bond market was weaker earlier Monday as traders reduced their safe-haven holdings in Treasuries and German Bunds on a drop in Greek debt yields following news that Greek Prime Minister Alexis Tsipras reorganized his team that has been negotiating with international lenders.
The reshuffle is seen a move by Athens to obtain fresh funds in exchange for domestic reforms before it runs out of cash in June.
"Greece remains a concern and we are seeing choppiness from overseas markets affecting US yields a bit," Rehling said.
Greek 10-year yields fell almost half a percentage point to 12.12 percent, which was not far from near 2-1/2 year peaks as a deal between the cash-strapped nation and its creditors remains elusive.
Lower peripheral euro zone yields led to modest selling in low-risk US and German government debt.
Benchmark 10-year Treasuries notes were down 4/32 in price for a yield of 1.933 percent, up 1.6 basis points from Friday, while their German counterparts were down 5 basis points in price for a yield of 0.16 percent, up a tad from Friday.
In the "when-issued" sector, traders expected the two-year notes due in April 2017 to fetch a yield of 0.5480 percent, which would be the lowest in three months.
The Treasury Department will release the results of the two-year auction shortly after 1 p.m. (1300 GMT).
It will sell $15 billion in two-year floating-rate notes and $35 billion in five-year notes on Tuesday and $29 billion in seven-year debt on Wednesday.
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