NEW YORK: US Treasury yields rose to their highest levels in six months on Tuesday in line with a continued selloff of German government bonds, and before the US government is due to sell $64 billion in new supply.
German bond yields have spiked in recent weeks for reasons that some attribute to optimism that inflation may have bottomed in the euro region, with the move being exacerbated by investors unwilling to enter the market until the selloff shows signs of stabilizing.
"It feels like market participants are unwilling to stand in the way of the move," said Ian Lyngen, senior government bond strategist at CRT Capital in Stamford, Connecticut.
New issuance is also weighing on the market. The Treasury is due to sell $24 billion in three-year notes on Tuesday, $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday. Corporate and other supply is also coming to market.
"The selloff in bunds and the need to accommodate this week's refunding auction and some corporate supply, has been the primary theme," Lyngen said.
Benchmark 10-year notes were last down 8/32 in price to yield 2.31 percent, after earlier rising as high as 2.37 percent, the highest since Nov. 14. Thirty-year bonds dropped 17/32 in price to yield 3.07 percent, after earlier increasing to 3.13 percent, the highest since Nov. 7.
The yield curve between five-year notes and 30-year bonds steepened to 147 basis points, the steepest since Oct. 31.
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