US Treasuries finished slightly lower on Wednesday on higher stock prices but they still drew a safe-haven bid from turmoil in the Middle East and North Africa as well as fears Portugal would seek a bailout.
Portugal's parliament rejected the minority Socialist government's austerity measures in a vote seen as likely to cause the administration's collapse. Prime Minister Jose Socrates had said he would resign if the plan was not approved and Portugal would probably be forced to request foreign aid.
"The fate of the US bond market for the moment is not in our hands. We sit here mesmerised by developments overseas and from a price perspective remain very reactive to the headlines," said David Ader, head of government bond strategy at CRT Capital in Stamford, Connecticut.
Black smoke again rose from Japan's Fukushima nuclear power plant, and the government warned that infants should not be given tap water because of radiation levels.
Analysts said it remained to be seen whether the Japanese will eventually sell Treasuries to finance rebuilding after the devastating earthquake and tsunami.
"As far as the potential for insurance payouts, that is still an open question as to how much that will be, and how much that will require repatriation of yen and therefore potential Treasuries selling longer-term as a result," said John Canavan, market strategist at Stone & McCarthy Research Associates in Princeton, New Jersey.
Bonds expanded early gains on news that US sales of new homes fell sharply in February. But gains were erased after the Federal Reserve bought $7.56 billion of Treasuries maturing May 2018 through February 2015 near 11 am (1500 GMT).
"A futures seller right after the buyback knocked the Treasury market back to unchanged," said John Briggs, US rate strategist at RBS Securities in Stamford, Connecticut.
"The steady recovery in equities also weighed on bond prices though overall, once afternoon set in, we were simply marking time to the close," he added.
US stocks rose on Wednesday.
Benchmark 10-year Treasury notes last traded 4/32 lower in price as its yield rose to 3.35 percent from 3.33 percent late Tuesday. Thirty-year bonds were unchanged in price, yielding 4.44 percent.
A big slate of corporate issuance this week, and solid demand for the corporate debt, may have contributed to some intraday price moves as issuers hedged against rate risk.
Two-year Treasury notes finished unchanged, yielding 0.66 percent, while five-year notes also ended unchanged, yielding 2.04 percent.
Comments
Comments are closed for this article.