NEW YORK: Encouraging housing starts data and a bulge of corporate bond supply knocked US Treasuries prices lower for a second day on Tuesday.
Traders reduced their bond holdings on news that domestic home builders broke ground at the fastest pace in nearly 7-1/2 years in April, which revived expectations the Federal Reserve may increase interest rates later this year.
"This morning's market action was driven by a pretty good housing starts number," said Stanley Sun, interest rate strategist at Nomura Securities International in New York.
A growing supply of corporate bonds added selling pressure on Treasuries, propelling their yields closer to the 5-1/2 month peaks seen last week.
Investment-grade companies raised $18 billion in the debt market on Monday with more on the way this week, according to IFR, a unit of Thomson Reuters.
Earlier, the US government debt market rose with gains in European bonds after Benoit Coeure, a top European Central Bank official, said it would pick up its bond purchases in May and June due to slow market activity in July and August.
The step-up in purchases for ECB's 1.1-trillion-euro quantitative easing program that began in March came as Greece and its creditors are still seeking terms for a deal that will unlock more cash for the debt-laden nation.
The yield on German 10-year Bunds was down 2 basis points at 0.633 percent, while the yield on 10-year Greek sovereign bonds retreated from a 2-1/2 week high to 11.18 percent.
In early US trading, benchmark 10-year Treasuries notes were down 19/32 in price to yield 2.297 percent, up 7 basis points from late on Monday.
The 30-year bond was 1-12/32 points lower, yielding 3.088 percent, up 7 basis points on the day.
A week ago, 10-year and 30-year yields reached 5-1/2 month peaks at 2.366 percent and 3.128 percent, respectively, according to Reuters data.
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