Treasuries decline

Investors aren't snapping up safe-haven US debt with the same gusto this week, but analysts said on Monday many in the market were hesitant to take bold positions until global conditions calmed. Treasury prices fell in light trading as progress in solving Japan's nuclear crisis and Western air strikes in Libya reduced safe-haven demand, with a brief, accelerated sell-off following news the Treasury Department will liquidate its mortgage-backed securities portfolio.
But Treasury yields may be stuck in a range for now, as violence escalated in Yemen and Syria, while the outcome of military action in Libya remains uncertain, and workers at Japan's stricken nuclear plant struggled to keep spent fuel and nuclear rods cool.
The day's most dramatic price action came after the Treasury Department said it would begin selling its $142 billion portfolio of agency-guaranteed mortgage-backed securities acquired in 2008 and 2009 amid the financial crisis - at a rate of around $10 billion a month.
The 10-year yield fell as low as 3.14 percent last week, and is down from as high as 3.77 percent in early February. Mitchell said the yields were the outer limits of the wider range in which Treasuries appeared to be rooted.
Two year notes were last down in 2/32 price to yield 0.64 percent, up from 0.59 percent late Friday, and five-year notes fell 12/32 in price to yield 2.03 percent, up from 1.93 percent. Thirty-year bonds dropped 14/32 in price to yield 4.45 percent, up from 4.42 percent. With no new Treasury supply planned for the week, and few releases of major economic data, however, concern over Japan and Libya could continue to dominate near-term price moves.
Meanwhile, concerns over the US budget deficit could also return to the fore in the coming weeks as the government is expected to hit its debt ceiling by the end of May. "If I have an upside concern in the near term, it's if it looks like the forward momentum on the medium-term plan for the debt and the deficits were falling apart," said Leslie Barbi, who manages about $30 billion in fixed income assets at RS Investments.