NEW YORK: US Treasuries yields rose on Wednesday as a selloff in German Bunds caused investors to reduce their holdings in other low-risk government debt, propelling US 30-year yields to their highest levels in five weeks.
A stronger-than-expected rise in domestic existing home sales in March revived bets the Federal Reserve would raise interest rates later this year, overshadowing concerns about the absence of a deal between Greece and its creditors.
Traders had snapped up Bunds since the European Central Bank began its 1.1 trillion euro bond purchase program in March with the aim of helping the euro zone economy.
"Bunds have been super overbought. They now hit some sell stops," said Karl Haeling, vice president at Landesbank Baden-Wurttemberg in New York.
The 10-year German yield was close to falling to zero last week. It was last 0.163 percent, doubling in three sessions.
Benchmark US 10-year Treasury note yields were up 6 basis points at 1.972 percent, the highest in 1-1/2 weeks, while the 30-year bond yield rose 7 basis points at 2.655 percent after hitting its highest since mid-March.
US yields fell earlier as an intense selling in front-end Eurodollar futures eased and bond dealers bought Treasuries to exit rate locks on corporate bonds they underwrote.
Analysts did not single out a factor for a broad selling in Bunds, Treasuries and British gilts. British 10-year yields jumped 16 basis points, their biggest one-day jump since August 2013, according to Reuters data.
Germany on Wednesday raised its growth forecast to 1.8 percent for this year and 2016 on more jobs and cheap oil, while a gauge on euro zone consumer confidence fell.
"Based on the (market) action, it seemed more technical than anything fundamental," said Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut.
While no deal has been struck, cash-strapped Greece will likely stay solvent until June, while the European Central Bank on Wednesday increased the cap on emergency funds Greek banks can access from the central bank.
Financial markets have focused on whether Greece's proposed reforms would be adequate to unlock more aid before it runs out of cash.
Analysts said further selling in Treasuries will likely be limited as higher yields would entice bargain-minded investors.
"This (sell-off) won't break us out of our recent trading range," said Anthony Valeri, fixed income strategist at LPL Financial in San Diego.
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