NEW YORK: Prices for US Treasuries fell on Monday, pressured by a $62 billion sale of new coupon-bearing government debt this week and increased risk appetite following a strong US jobs report last Friday.
Yields on US long-term securities rose for a second straight day, helped by easing tensions between Russia and Ukraine.
Ukraine and Russia will hold talks on Monday to avert a gas war, a welcome sign that both countries are at least willing to talk. The meeting is meant to prevent supply disruptions and eventually take the heat out of the conflict in eastern Ukraine.
US bond supply, however, remained the focus of the week, with the $62 billion Treasury coupon auctions, beginning with Tuesday's $28 billion three-year note sale. That will be followed by the sale of $21 bln in 10-year notes on Wednesday, and $13 billion in 30-year bonds.
"Some of today's weakness is just prepping for the auction that's coming this week," said David Keeble, global head of interest rates strategy at Credit Agricole in New York.
"It's the long ones on auction, so you've got to put duration in the market and we're doing it now without much help from Federal Reserve purchases that we've had before."
Benchmark 10-year notes were last down 7/32 in price to yield 2.622 percent, from 2.591 percent late on Friday.
For the first time since April 2010, Spanish 10-year yields fell below those of US Treasuries. Spanish yields hit historic lows of 2.584 percent.
Italian five-year yields were also below US equivalents, highlighting the policy divergence between the European Central Bank, which has launched further stimulus, and the Fed, which has been reducing its asset purchases.
The impending end of the Fed's quantitative easing has been helped by upbeat US non-farm payrolls, which increased by 217,000 last month, returning employment to its pre-recession level.
US five year note prices were down 5/32 to yield 1.687 percent.
US 30-year bonds fell 12/32 in price to yield 3.457 percent, from 3.432 percent late on Friday.
There's also a broad risk-on feel to the market, analysts said.
"A spillover from Friday's good jobs report makes some sense and you could also say that some of the news from Russia/Ukraine has been a bit better, that they are finally seeming to talk to each other," said Credit Agricole's Keeble.
Comments
Comments are closed.