NEW YORK: US Treasuries yields rose on Tuesday with benchmark yields reaching seven-month highs on selling spurred by this week's flood of debt supply, including $24 billion in three-year government notes.
Investors' sales and dealers' hedging tied to an expected hefty supply of corporate bonds exacerbated the rise in Treasuries yields following last Friday's surprisingly strong US jobs report, analysts said.
"The theme du jour is supply, which is expected to accelerate this week," said Ed Atkins, Treasury strategist at RBS Securities in Stamford, Connecticut.
Traders also blamed the rise in US yields on a renewed selloff of German Bunds.
The spike in yields enticed investors seeking higher income at the latest three-year note sale, part of this week's $58 billion in government debt supply, analysts said.
The three-year issue due June 2018 fetched a yield of 1.125 percent, the highest since April 2011.
Perceived solid demand at the three-year auction rekindled some buying that brought longer-dated yields down from their seven-month peaks.
The yield on benchmark 10-year Treasuries notes hit a seven-month peak of 2.449 percent before easing to 2.420 percent, up 4 basis points from Monday.
The 30-year bond yield was last at 3.152 percent, up 5 basis points on the day, after it hit a seven-month high of 3.1830 percent earlier.
In the corporate bond sector, investment-grade companies may sell up to $30 billion in debt this week, according to IFR, a unit of Thomson Reuters.
The weakness in Treasuries was mitigated by some safe-haven demand as Greece continued to seek a deal with its creditors.
On Tuesday, Athens submitted a new reform proposal, which three European Union officials told Reuters was insufficient for Greece to obtain more cash.
Traders fear Greece's struggle to meet its debt obligations could portend its exit from the euro zone, a move that could hurt global financial markets.
US yields have risen since late April, largely in response to a sharp selloff in German Bunds as pessimism about Europe has lessened.
The 10-year Bund yield ended at 0.952 percent, up 6 basis points on the day.
News of a larger-than-expected 280,000 US job gain in May had spurred selling in Treasuries as it raised bets the Federal Reserve may lift interest rates as early as September.
"People are looking at the positive data. A September rate hike is looking more likely," said Subadra Rajappa, head of US rates strategy at Societe Generale in New York.
Comments
Comments are closed.