NEW YORK: US Treasuries yields rose and the yield curve steepened on Wednesday as the market made price concessions ahead of the US Treasury's 10-year note sale later in the session.
The Treasury will auction $21 billion in re-opened 10-year notes at 1 p.m. (1700 GMT) in the government's second coupon sale of the week. The Treasury sold three-year notes on Tuesday and will sell 30-year bonds on Thursday.
"The market set-up for today's 10-year auction should keep the curve in its steepening mode through the supply," said John Spinello, chief fixed-income technical strategist at Jefferies & Co in New York.
In when-issued trading, the 10-year notes to be sold at 1 p.m. ET (1700 GMT) yielded 3.54 percent.
Bonds opened weaker and lost further ground when the government released data on March US retail sales that, with revisions to data for past months, presented a firmer sales pictures than some traders had come to expect in light of some recent downward revisions to first-quarter GDP forecasts.
"March results were slightly better than consensus, with upward revisions to the back two months," said Jay Feldman, economist at Credit Suisse. "Sales excluding autos and gas are trending at a decent 5.1 percent annual clip."
"With upward revisions, (it was) a generally firm report," said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut.
"The market is off, the curve a bit steeper, so it was an appropriate response and concession for the 10-year auction," Ader said.
Ten-year notes were down 7/32 before the report and down 11/32 afterward, their yields rising to 3.54 percent from 3.50 percent on Tuesday.
Two-year notes, unchanged before the report, were down 1/32 afterwards, their yields edging up to 0.78 from 0.77 percent on Wednesday.
Thirty-year bonds, down 15/32 before the report, were down 19/32 afterwards, their yields rising to 4.61 percent from 4.58 percent on Tuesday.
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