US bonds dip

Most US Treasury prices slipped on Friday as a cease-fire declaration in Libya pared safety bids for bonds, which might retest three-month lows next week. Libya's foreign minister said on Friday his government would halt all military action in the recent civil unrest in the country.
Bond yields might retest recent lows next week Also putting a brake on demand for bonds was the rise in Wall Street stocks after the Group of Seven central banks jointly intervened to stem the surge in the Japanese yen in the wake of the natural disasters and nuclear plant crisis in Japan, on fears the global economy could be at risk.
Treasuries losses were limited though as uncertainty over the turmoil in the Middle East and North Africa and the catastrophe in Japan left investors reluctant to head into the weekend short of safe-haven US government debt.
"There is not a lot of reasons for people to short Treasuries going into the weekend," said Anthony Valeri, fixed income strategist at LPL Financial in San Diego, which manages about $280 billion in assets. Benchmark 10-year notes ended down 5/32 in price to yield 3.28 percent, up from 3.26 percent at Thursday's close. The 10-year yield was down 13 basis points on the week after trading as low as 3.14 percent intraday.
As a result, the two-to-10-year part of yield curve narrowed to 2.69 percent from 2.76 percent a week ago, although it steepened on Thursday and Friday. The 30-year bond bucked the downward trend, rising 5/32 to yield 4.43 percent, down 1 basis point from Thursday.
Daily trading volume stayed above average but slowed to the lowest levels after reaching hefty volumes earlier this week, according to Tradeweb. Some analysts reckoned that Japan, similar to what it has done in the past, would weaken its currency by buying short-dated Treasuries, which would result in a steeper US yield curve.
Other analysts, however, expect bonds to remain captive to lingering worries over global growth from the troubles in Japan and the Middle East and speculation whether the Federal Reserve is preparing to step away from its quantitative easing. These factors will likely flatten the yield curve further in the coming days. A renewed flood of bids for Treasuries will likely push the 10-year yield to test chart resistance at 3.20 percent and the yield curve to 2.60 percent, analysts said.