NEW YORK: Yields on US Treasury debt ended mostly lower on Monday with benchmark yields retreating from seven-month highs as concerns about Greece and its ability to avert default renewed demand from investors for lower-risk government debt.
Greece and its creditors have not reached a deal for the cash-strapped country to obtain more funds. Greece delayed a 300 million euro payment to the International Monetary Fund last week and rattled investors on Friday when Prime Minister Alexis Tsipras rejected a proposal from lenders.
Athens struck a more conciliatory tone Monday, raising hopes an agreement may be obtained by the end of June.
"Greece is clearly a big issue. People are watching and waiting," said John Herrmann, an interest rates strategist at Mitsubishi UFJ Securities USA Inc in New York.
The safety bid provided a respite for the US bond market, coming off its worst week in three months.
A surprisingly strong US payrolls report for May on Friday had raised bets the Federal Reserve may hike US interest rates later this year. It also spurred selling on Friday, resulting in benchmark 10-year Treasury yields booking their largest one-week increase in nearly two years.
Wall Street's top banks now expect the Fed, the US central bank, to begin raising rates in September, followed by another hike before year-end, a Reuters poll on Friday showed.
The yield on 10-year Treasury notes last traded at 2.390 percent, down 1 basis point from late on Friday. It hit 2.442 percent on Friday, the highest since early October.
The five-year yield fell 3 basis points to 1.712 percent.
But the 30-year bond yield turned flat in late trading, paring its earlier fall. It was last up 0.5 basis point to 3.115 percent.
The drop in yields will likely be limited as investors seek to reduce Treasuries holdings ahead of this week's supply.
The Treasury Department will sell a combined $58 billion in three-, 10- and 30-year securities, starting on Tuesday.
Investors also face plenty of choices from the higher-yielding corporate bond sector, analysts said.
Companies are expected to sell about $30 billion in investment-grade debt this year, according to IFR, a unit of Thomson Reuters.
"Foreign demand looking for higher yields in the US will likely support these auctions," said Stan Shipley, a strategist at Evercore ISI in New York.
German 10-year Bunds were yielding 0.886 percent, about 1.50 percentage points below their US counterparts.
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