LONDON: US Treasuries dipped in Europe on Monday on some profit-taking after the market's rally last week, but losses were curbed by falls in equities following weaker-than-expected macro economic data from China.
The Treasury market rallied sharply on Friday as data showed consumer spending and retails sales declined more than expected in March, stoked concern that growth in the world's biggest economy was slowing.
Ten-year T-notes were 3/32 down in price to yield 1.73 percent, one basis point up from late US trade on Friday. The yield has steadily pulled away from 11-month highs just over 2 percent set in early March, as surprisingly weaker US data and renewed concern about how the euro zone was handling its weaker economies lifted demand for safe-haven debt.
"We had a big move on Friday on the disappointing data, especially the consumer confidence. Now the potential for yields to move lower is rather limited. We are now waiting until we get data later this afternoon," said Philip Marey, a strategist at Rabobank.
"Although the New York Fed manufacturing index is a regional index, we could get an idea of where things are in April because some of the slowdown in March could be due to seasonal factors."
Marey, however said he saw little impetus for yields to go much higher than they are given the downbeat data so far.
Prospects that Japanese buyers could switch out of ultra-low yielding domestic bonds into non-denominated assets after the Bank of Japan's huge monetary stimulus were also seen limiting any sell-off in Treasuries.
"Generally I would look for a position to get long... Asian equities are retreating and European equities are pulling back. I wouldn't be surprised when guys in New York come in and start buying on the dips," a trader said.
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