US Treasury yields steady before this week's supply

LONDON: US Treasury yields were broadly steady on Tuesday as the prospect of supply this week offset a boost in demand for Treasuries from weaker-than-expected jobs data.

US 10-year government bond yields were flat at 2.05 percent and 30-year yields were little changed at 3.20 percent with the US Treasury scheduled to sell 10-year notes on Wednesday and 30-year paper on Thursday.

"You have got supply, so if anything that supply is going to weigh on the market. It's real duration that is coming into this market," said a trader.

At 2.05 percent, 10-year yields still hovered close to four-week lows hit on Monday. Yields fell as far as 2.019 percent that day after US jobs data came in below expectations last week, casting doubt over the strength of the US economic recovery.

Friday's US non-farm payrolls report showed just 120,000 jobs were added during March, far below the market's median expectation of 203,000 and helping to revive speculation of further quantitative easing by the Federal Reserve. Treasuries did not fully react to the data last week as the market was only open for half a day during the Good Friday holiday.

Societe Generale expected the 10-year Treasury yield to break below the 2.019/2.031 percent support area and decline to at least the tentative rising support line coming at 1.851 percent.

But others in the market said yields could remain around current levels until they get further evidence of economic weakness or additional insight into the Fed's thinking on more monetary stimulus.

"Markets had become maybe a bit too optimistic and had written off more monetary easing too early," Philip Marey, strategist at Rabobank said. "If we get a couple of bad non-farm payrolls in a row, I think it would be interesting for the Fed to start sterilised asset purchases."

Dallas Fed President Richard Fisher, an outspoken policy hawk, told Reuters in March he had not heard US monetary policymakers discuss the possible introduction of a "sterilised" bond-buying programme, where it seeks to counter any inflationary impact, as was suggested by a report in the Wall Street Journal that month.

Before the jobs data, market participants had interpreted recent Fed comments and improved data to mean the bar for further monetary stimulus was extremely high.