NEW YORK: US Treasuries prices slipped on Thursday on renewed optimism that Greece would avert a debt default after the country's international creditors presented a final cash-for-reform proposal to euro zone finance ministers.
Euro zone finance ministers will work on a financing-for-reforms deal with Greece on the basis of a proposal from the creditor institutions as negotiations with Athens have produced no agreement, officials said.
"The main thing is Greece, and the market is still going to move to some degree, up and down, based on the headlines," said Lou Brien, market strategist at DRW Trading in Chicago.
Analysts said that while the slight weakness in Treasuries prices was due to optimism over a Greek debt deal, traders' uncertainty over the outcome of negotiations capped losses and prices were likely to remain volatile in response to developments out of Greece.
Thursday's price losses curtailed a rally in Treasuries prices on Wednesday after a roadblock in negotiations crimped demand for safe-haven U.S. government bonds. Most yields remained within recent ranges on Thursday, while five-year note yields bucked the trend and rose to a more than one-week high of 1.73 percent.
Traders' preoccupation with Greece overshadowed data showing U.S. consumer spending grew its most in nearly six years in May on strong demand for automobiles and other big-ticket items.
U.S. economic data has been closely watched recently given its potential to influence the Federal Reserve's timeline for hiking interest rates for the first time in about ten years. A Fed rate hike would likely hurt bond prices.
"As much as we are data-dependent for the Fed, I don't think it had much of an impact on the market," said Justin Lederer, Treasury strategist at Cantor Fitzgerald in New York, in reference to the latest U.S. data. "The market is just focusing on Greece."
The Treasury will sell $29 billion in seven-year notes at 1:00 p.m. ET (1700 GMT), marking the last round of this week's $90 billion in new supply. Lederer said quarter-end buying of U.S. Treasuries could bolster demand at the sale.
U.S. 30-year Treasuries were last down 12/32 in price to yield 3.17 percent, from a yield of 3.15 percent late Wednesday. Benchmark 10-year notes were last down 11/32 to yield 2.41 percent, from a yield of 2.37 percent late Wednesday.
Five-year notes were last down 7/32 to yield 1.73 percent, from a yield of 1.68 percent late Wednesday.
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