LONDON: US bond prices slipped on Tuesday as a strong German market sentiment survey and a US Republican proposal for a limited rise in the debt ceiling curbed demand for safe-haven assets.
Germany's ZEW analyst and investor sentiment survey beat expectations with a sharp rise for the second month in a row, in a sign the euro zone crisis is no longer hitting Europe's largest economy as hard as in late 2012.
In Washington, Republican leaders in the House of Representatives said they aim to pass on Wednesday a measure that would allow the government to borrow the money it needs to pay its bills for nearly four months more, to May 19.
Some investors interpreted the proposal as a sign of Republicans softening their tone in the negotiations, but the market reaction was limited as there was uncertainty over whether the Democrats would accept it.
Ten-year T-note yields were last 3.7 basis points higher on day at 1.8770 percent. T-note futures were 8/32 lower at 131-57/64.
"We're waiting for further details on the debt limit debate," said Nick Stamenkovic, bond strategist at RIA Capital Markets in Edinburgh. "We're stuck in a narrow 1.80-1.90 percent range at the moment (in 10-year yields), and as long as we don't see an agreement I can't see them getting out of that."
Traders said the Republican proposal mainly hit safe-haven assets on Monday, but US Treasuries were catching up with the move after being shut in the previous session in observance of Martin Luther King Jr. Day.
A trader said the rise in yields on Tuesday was limited by an announcement by the Bank of Japan that its open-ended commitment to buy assets would only kick in next year, disappointing those who expected more aggressive measures.
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