NEW YORK: US Treasury debt prices reversed early gains and turned lower on Wednesday after a news report that Greece had reached an agreement in principle with euro zone countries over its finances.
The benchmark 10-year Treasury, which was up in earlier trading, was last off 8/32 and yielding 2.021 percent after touching a high yield for the session in late trading of 2.028 percent.
CNBC reported late on Wednesday that an agreement in principle between Greece and other euro zone governments was in place.
But two official sources told Reuters that, while there was no deal yet, a common statement was being drafted that could leave it open for Greece to extend its current financing.
The 30-year long bond also fell on the CNBC report and was last off 11/32 to yield 2.587 percent, according to Thomson Reuters data.
Price declines in intermediate- and short-dated maturities were smaller.
Earlier, long-dated Treasury debt prices got a boost from a well-received $24 billion auction of new 10-year notes that drew heavy foreign buying.
The Treasury auction had a better-than-expected high yield of 2.0 percent, a bid-to-cover ratio of 2.62 percent, and the best indirect bid by foreigners and others since December 2011 at 59.5 percent. The market yield on the 10-year was 2.01 percent just before the auction results were published.
"We award this auction a grade A," Nomura Securities analysts said in a note to clients.
Traders and analysts saw the auction as confirmation of continued foreign interest in Treasuries, which pay much higher rates than European and Japanese sovereign debt.
A 10-year German bund pays 162 fewer basis points than a 10-year Treasury.
"The demand for longer-dated paper is out there," said Mary Ann Hurley, vice president in fixed income trading at D.A. Davidson in Seattle. "The market is finding good support at 10s at 2 percent." US yields have climbed in recent weeks on growing signs America's labor markets are expanding as other big economies battle slow growth. At the end of January, US 10-year yields were 1.668 percent.
The Treasury Department sold $24 billion of three-year notes on Tuesday and is scheduled to sell $16 billion of 30-year bonds on Thursday.
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