NEW YORK: US Treasury debt prices rallied for a second straight session on Monday as investors consolidated positions in a week generally thin on economic data after last Friday's stronger-than-expected U.S. jobs report.
U.S. 30-year bond yields fell below 3.0 percent, while those of other issues slipped as well, with 10-year yields sliding to a session low of 2.245 percent.
Yields fell on Friday, despite robust U.S. non-farm payrolls for November, with market participants attributing the rally in prices to position-adjustment after prolonged weakness in Treasuries going into the jobs report.
"I don't think yields are off too big and we had a pretty big sell-off prior to the non-farm payrolls number. So we're coming from an oversold condition," said David Coard, head of fixed income sales and trading at Williams Capital Group in New York
Yields initially rose on Friday after non-farm payrolls increased 211,000 last month and September and October data were revised to show 35,000 more jobs than previously reported. The data reinforced expectations that the Federal Reserve will raise rates next week.
Analysts said investors continued to put on "curve-flattening" trades, selling the front end of the curve, and buying the long end in anticipation of the Fed's rate hike.
Traders tend to sell the short end, it being the most vulnerable to a Fed tightening, while they buy the long end, which could benefit from lower inflation once the Fed raises rates.
This week's $58 billion in supply could limit the fall in yields. In the pipeline are $24 billion in 3-year notes on Tuesday, $21 billion in reopened 10-year notes on Wednesday and $13 billion in 30-year bonds on Thursday.
The government is also selling $54 billion in 3- and 6-month bills on Monday and $14 billion in 52-week bills on Tuesday. Analysts at Action Economics said it would be the first time since mid-2006 that the market will bid for paper with a Fed rate hike imminent.
In mid-morning trading, benchmark 10-year Treasury notes were up 6/32 in price to yield 2.251 percent, down from 2.273 percent late on Friday.
The 30-year bond rose 15/32 in price to yield 2.984 percent, down from 3.007 percent on Friday.
U.S. 2-year Treasury notes were little changed in price, with a yield of 0.934 percent, down from 0.951 percent on Friday. On Thursday, two-year yields hit 0.994 percent, their highest since May 2010.
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