NEW YORK: US Treasuries prices were largely flat in choppy trading on Tuesday as earlier optimism over new bailouts in the euro zone ebbed and as investors prepared for Federal Reserve purchases of long-dated debt.
Bonds weakened earlier as renewed hopes about Europe's debt crisis that traders attributed to a report that the US, euro zone and International Monetary Fund were creating a multi-part rescue fund of 1.5 trillion euros ($1.98 trillion).
This optimism, which reduced demand for US safe haven debt, weakened as the New York trading session began as buyers came back in on an expectation that continuing issues in the region would keep a bid for Treasuries.
"I think there's some skepticism over this 1.5 trillion bailout," said Scott Graham, head of Treasuries trading at BMO Capital Markets in Chicago. At the same time "there's some deal flow today and a 30-year buyback. The combination of those two is somewhat bullish."
The Fed will purchase as much as $2.75 billion in bonds due between 2036 and 2041 on Tuesday as part of its Operation Twist program, which is designed to lower long-term borrowing rates.
Hopes that Greece will strike a deal with its creditors to restructure its debt helped revive risk taking earlier on Tuesday after Greek Prime Minister Lucas Papademos said negotiators had made "significant progress" and aimed to have a definitive agreement by the end of this week.
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