Treasuries fall

US Treasuries prices fell on Thursday as optimism that Greece will successfully put in place a bond swap to stave off a disorderly debt default encouraged investors to turn to riskier assets and move away from safe-haven US government debt. Losses were limited, however, as investors considered the murky longer-term outlook for Europe's debt crisis, which many expect will eventually impact global growth.
While Treasury yields were marginally higher, they remain near the centre of a recent historically low range. Market players were also setting up for a US government report to show decent growth in February payrolls when it is released on Friday. "It is all related to the risk-on trade as the people are going toward stocks thinking that the Greek bond deal is going to go through, and expectations that the economy here is getting back on track," said Mary Ann Hurley, vice president of fixed-income trading at D.A. Davidson & Co in Seattle.
Investors were optimistic that Greece would win enough support from private creditors for a debt restructuring that is crucial for the country to receive a second round of bailout funds from the European Union and the International Monetary Fund. Greece must receive the funds by March 20 to avoid a messy default that could destabilise the euro zone's financial system.
Around 95 percent of Greece's private creditors have signed up for the bond swap, a senior Greek government official said. The benchmark 10-year US Treasury note slipped 13/32 in price to yield 2.02 percent, up from 1.98 percent late Wednesday. Yields are not far off the middle of a range of 1.79 percent to 2.17 percent that has held sway since early November.
The 30-year bond dropped one full point in price to yield 3.17 percent, up from 3.13 percent late Wednesday. Losses increased as US stocks rallied further and the Standard & Poor's 500 gained 1 percent. "We are focused on Europe and the monthly employment data," said William Larkin, fixed-income portfolio manager at Cabot Money Management in Salem, Massachusetts.
Higher-than-expected weekly jobless claims had little impact on trade, as investors looked ahead to the February non-farms payrolls data. The median of forecasts from analysts polled by Reuters is for employers to have added 210,000 jobs last month, down from 243,000 new jobs in January. The Federal Reserve once again bought longer-dated Treasuries on Thursday as part of its latest stimulus program, nicknamed "Operation Twist." The Fed purchased $5.105 billion of Treasuries maturing August 2020 through August 2021.