NEW YORK: US Treasury debt prices fell on Tuesday, bumping benchmark 10-year yields above 2 percent for the first time in a month as investors positioned for a probable rate hike by the Federal Reserve and big government bond auctions.
Ten-year Treasury notes on Tuesday yielded as much as 2.016 percent, a high last seen on January 9, and were last trading at 1.9897 percent, falling 12/32 in price, according to Thomson Reuters data.
Thirty-year bond yields were last trading at 2.5506 percent, reflecting a price decline of 22/32, after touching a session high of 2.596 percent.
"That's four consecutive down days, and we are still showing some of the hangover from the good nonfarm payrolls report on Friday," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC in Philadelphia.
Bonds sank last week, in part because an unexpectedly strong U.S. jobs report on Friday suggested to many investors that the labor market's strength bolsters the case for the Federal Reserve to raise short-term rates sooner than later.
Shorter-term Treasuries, the securities most sensitive to Fed interest-rate shifts, were also off in price on Tuesday, according to Thomson Reuters data. Five-year notes fell 4/32 to yield 1.5071 percent.
"The front end of the curve is still pricing market expectations for the timing of the first Fed rate hike," LeBas said. "The probability has come forward."
Treasuries on Tuesday were getting little lift from a safety bid driven by geopolitical crises such as the standoff between Greece and other euro zone countries, LeBas said.
Stock markets, including Wall Street, rose on Tuesday amid reports Greece may get six months of aid from euro zone governments.
The bond market was also preparing for this week's $64 billion of Treasury debt auctions starting on Tuesday, along with sizeable corporate bond deals, such as the $10.75 billion Microsoft Corp priced on Monday.
The Treasury department is scheduled to auction $24 billion of three-year notes on Tuesday, another $24 billion of 10-years on Wednesday and $16 billion of 30-years on Thursday.
"With 10s hovering around 2 percent, we'll see good demand, particularly from overseas investors and the domestic insurance community," LeBas said.
Yields on 10-year Treasuries are up about 44 basis points in the past week, according to Thomson Reuters data.
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