NEW YORK: US Treasuries prices fell slightly on Monday after world leaders over the weekend backed keeping Greece in the euro zone, easing some demand for safe haven US debt, and as $99 billion in new Treasuries supply scheduled for this week was seen weighing on prices.
A summit of the Group of 8 leading industrialized nations on Saturday said they had an interest in having Greece stay in the euro zone and said they would balance European austerity in the region with US style-stimulus seen as vital to healing ailing euro-zone economies.
Investors are looking to the European Central Bank for signs that the central bank will offer new long-term loans as bank funding stresses in the region again rise, though the ECB is not expected to act unless conditions in the worsen.
"There was a lack of bad headlines over the weekend," said Sean Murphy, a Treasuries trader at Societe Generale in New York. That said, "Greece and political uncertainties in Europe continue to be the driving factor in the market."
Traders were also consolidating positions after a two-month rally driven by fears over Europe and concern that US economic growth is slowing.
Benchmark 10-year note yields have fallen by more than 60 basis points in the last two months to trade on Monday at 1.73 percent, just above their recent low of 1.67 percent set on Sept. 23.
New Treasuries sales this week that will include $99 billion in two-year, five-year and seven-year notes may serve as resistance to keep yields above their recent lows, said Societe Generale's Murphy.
Thursday's seven-year note auction may set a new record low for the Treasury after the notes on Friday fell to new low yield of 1.14 percent.
April's seven-year note auction sold at record low auction yields of 1.35 percent.
The Federal Reserve will also buy as much as $2 billion in longer-dated debt due between 2036 and 2042 later on Monday as part of its Operation Twist program.
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