US debt prices fall without new safety bid

NEW YORK: US Treasury prices fell on Wednesday as developments on several fronts in Europe led investors to believe the worst of the continent's debt crisis was -- at least for the moment -- behind them.

Signs of more stability in Europe took away the driving force behind Treasuries' rally -- the desire by market participants to stash their money in the safest possible place.

Losses were heaviest for longer-dated Treasury debt, with the 30-year bond price falling close to a full point ahead of the Treasury's 1 p.m. (1700 GMT) auction of 30-year bonds.

In Europe, a scheduled conference call between the leaders of France, Germany and Greece demonstrated the European leaders' willingness to continue to try to prevent Greece from defaulting on its debt.

Meanwhile, Moody's Investors Service downgraded two of the largest French banks, but the ratings cut was smaller than expected and did not include a third bank, as many had feared.

Thirty-year bonds fell 26/32 in price, their yields rising to 3.37 percent from 3.33 percent on Tuesday.

The Treasury will sell $13 billion in reopened 30-year bonds today, the final auction this week, with US debt sales totaling $66 billion.

Benchmark 10-year notes slipped 8/32, their yields rising to 2.02 percent from 2 percent on Tuesday.

Copyright Reuters, 2011