US Treasuries prices climbed for a third straight day on Tuesday as worries that a eurozone plan reached last week would not resolve the region's debt crisis fuelled safe-haven buying of US government debt. Benchmark 10-year Treasury note yields fell below 2 percent after Greece's surprise call for a referendum on the deal for aid from the European Union, but Treasuries pared some losses in the afternoon following media reports of growing opposition to the Greek referendum.
"Everything continues to trade on what is going on overseas," said Mary Ann Hurley, vice president of fixed income trading at D.A. Davidson & Co in Seattle, adding "the plan that eurozone ministers agreed on last week has so many holes in it, and now Greece is balking at it."
Greece said it would hold a referendum on a new aid package from the EU, designed to prevent a sovereign default, asking voters to decide if they wanted to adopt the drastic spending cuts required to get its next set of rescue loans from the eurozone and the International Monetary Fund.
Ten-year Treasury notes traded 1-5/32 higher in price to yield 1.98 percent, down from 2.11 percent late Monday. The yields had dipped to 1.95 percent, marking the lowest in over three weeks. Long bonds were heavily bolstered, with 30-year Treasuries trading 3-1/32 higher in price to yield 2.99 percent after dipping to as low as 2.95 percent. Bond yields have lost over 35 basis points in three days.
"If the Greeks shoot the eurozone deal down, then Greece will be forced to default with a further risk that they could be forced out of the euro. That would be bad for everyone and, therefore, good for Treasuries as people seek safety," said John Canavan, market analyst at Stone & McCarthy Research Associates in Princeton, New Jersey.
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