NEW YORK: US Treasuries prices fell on Monday, with the long-end of the curve suffering the most of the sell-off and extending the prior week's declines amid low trading volumes because of holidays in Tokyo and London.
The 30-year US Treasury bond fell 1-1/32 points in price, sending the yield to a five-month high of 2.8850 percent.
Analysts said a combination of factors affected the 30-year Treasury, including negative yields in Europe and a drop in demand for new bonds, plus hints of rising wage inflation in the United States.
"The German (five-year) auction last week failed and the reason is diminishing investor demand. They seem to be fighting against that negative yield and the effects have been reverberating along the curves in Germany and in the US," said Justin Hoogendoorn, fixed income strategist at BMO Capital Markets in Chicago.
"Add in the question of whether investors will buy at such low yields and then include slightly elevated (US) labor costs, the 30-year seems to be the pressure point with diminished demand," he said.
Investors looked past a report showing new orders for US factory goods had their biggest increase in eight months in March, rising 2.1 percent versus forecasts for a 2.0 percent gain.
"We're coming off last week's highs (in yields) but on very light volumes. I think the market is looking for some stability and toward Friday's payrolls data," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York.
The rest of the week holds reports on business activity in the critical services sector, the ADP national employment report, weekly jobless claims and finally the Labor Department's non-farm payrolls report for April on Friday.
Recent US economic data have shown a moderating growth rate, injecting some doubt as to when the US Federal Reserve will finally lift interest rates off of their zero-bound level.
Benchmark 10-year US Treasuries fell 7/32 of a point in price on Monday, nudging the yield up to 2.14 percent . The yield is off its earlier seven-week high.
While Tokyo is closed for the Golden Week holidays and London's market is shuttered for the early May bank holiday, trading in continental Europe has the German bund yield rising above 0.40 percent as deflation fears ease.
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