NEW YORK: US Treasury debt prices rose mildly on Wednesday, their safe-haven allure bolstered by concerns Greece might not be able to avert a disastrous default despite a second financial bailout.
Gains were limited, however, as investors balked at higher prices during a week when the Treasury is selling $99 billion of notes. Investors typically will push for price concessions during such sales periods.
Benchmark 10-year Treasury notes were trading 16/32 higher in price to yield 2.01 percent, down from 2.06 percent late Tuesday, while 30-year bonds were 1-8/32 higher to yield 3.15 percent, from 3.21 percent.
Treasuries prices fell on Tuesday as the long-awaited bailout deal for Greece undermined the appetite for safe-haven assets. Still investors worried that Greece will struggle to meet the demands of the new 130-billion euro rescue plan.
"Greece is still pretty shaky. I don't think anyone believes that the worst is over for Greece or the euro zone," said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco. "Treasuries had cheapened up a bit so they are a little more palatable at these levels."
The US Treasury will sell $35 billion of five-year notes on Wednesday and $29 billion of seven-year notes on Thursday. An auction of $35 billion of two-year notes on Tuesday was met with about average demand.
The new note sales come as the Federal Reserve conducts two sales this week of shorter-dated Treasuries as part of its latest stimulus program, dubbed "Operation Twist." The Fed on Tuesday sold $8.61 billion of shorter-dated Treasuries, and is scheduled to sell a further $8 billion to $8.75 billion on Thursday.
While the Fed will also buy longer-dated Treasuries this week as part of the program, the myriad securities at auction had some investors wondering if there would be sufficient appetite for all of the shorter-dated debt.
The Fed on Wednesday bought $1.839 billion of bonds maturing February 2036 through August 2041 as part of Operation Twist.
Market players were also keeping an eye on rising oil and gasoline prices, which could curb consumer spending and hamper economic recovery. Crude oil for March delivery, as traded on the New York Mercantile Exchange, closed on Tuesday at $105.84 per barrel, which was the highest settlement for front-month NYMEX crude since May 4.
"Rising crude oil and gasoline prices also suggests that it remains too early to pull the plug on my bullish 10-year note call," said Steven Ricchiuto, chief economist at Mizuho Securities in New York.
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