NEW YORK: US Treasury prices fell on Friday as traders booked profits on recent gains ahead of next week's government debt supply and a meeting of global central bankers where Federal Reserve Chair Janet Yellen is scheduled to speak.
The US Treasury Department will sell a combined $88 billion in two-year, five-year and seven-year notes next week.
Weaker sovereign bond prices in Europe also exerted downward pressure on their US counterparts on light volume and in the absence of US economic data, analysts said.
"It's started in Europe and it's gathering some momentum in the US," said David Keeble, global head of interest rates strategy at Credit Agricole Corporate and Investment Bank in New York.
The yield on German 10-year Bunds was up 2 basis points at -0.057 percent, while the yield on 10-year British gilts rose 4 basis points to 0.595 percent.
Benchmark 10-year Treasury notes were down 15/32 price for a yield of 1.585 percent, up 5 basis points from late on Thursday, while the 30-year bond was 29/32 lower to yield 2.301 percent, up 4 basis points.
The yield on two-year Treasury notes, which are sensitive to traders' views on Fed policy, rose 4 basis points to 0.746 percent.
Traders are looking ahead to Yellen's scheduled speech on monetary policy on Friday at a conference in Jackson Hole, Wyoming, for possible clues on the timing of a rate increase.
Analysts expect Yellen will stick to an easy policy stance in her speech as domestic inflation remains below the Fed's 2 percent target and there continues to be uncertainty about the global risks to US economic growth.
The central bank's minutes from its July 26-27 policy meeting, released on Wednesday, showed policymakers wanted to "leave their policy options open" on raising rates.
San Francisco Fed President John Williams said late on Thursday that he is in no hurry to raise rates, but cautioned that the economy could overheat if rates are kept low for too long.
Interest rate futures implied traders see a 53 percent chance the Fed will raise rates at its Dec. 13-14 policy meeting, up from 47 percent at Thursday's close, according to CME Group's FedWatch tool.
"They want to keep the window open (on a rate hike) and get the job done in December," said Robert Tipp, chief investment strategist at Prudential Fixed Income in Newark, New Jersey.
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