Treasuries end lower

US Treasury debt prices ended lower on Tuesday, snapping a seven-day winning streak as dealers cut prices before 10- and 30-year Treasury auctions. But recent commodity price declines, some weaker economic data, and concerns about the eurozone restrained the selling. The Treasury will sell $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday. A $32 billion three-year auction on Tuesday drew average demand.
Before the auction, three-year notes had a yield just above the psychological 1 percent level, allowing the auction to draw a 3.29 ratio of bids offered to those accepted, said Cantor Fitzgerald Treasury analyst Justin Lederer in New York. Bonds reached session highs at mid-morning, then crept lower for the rest of the session, "building in a small, but necessary, concession" before the refunding supply, he added. Selling was limited, though, as concern about challenges to the eurozone and its currency sustained some appetite for safe-haven US debt.
Lower inflation expectations engendered by a sharp sell-off in commodities, including crude oil, late last week are also supportive for Treasuries, traders said. Speaking in Stone Mountain, Ga. a month ago, Federal Reserve Chairman Ben Bernanke said US inflation was mainly being driven by a global rise in commodity prices, but said the inflation increase would be "transitory." At the time, Bernanke's comments stood in sharp contrast to those of some other Fed officials who argued the time was coming for the Fed to begin tightening monetary policy. In late trade on Tuesday, benchmark 10-year notes were down 11/32 in price, their yields rising to 3.21 percent from 3.16 percent on Monday.
The 30-year bond was down 13/32 in price, its yield rising to 4.34 percent from 4.32 percent. Standard & Poor's cut Greece's credit rating on Monday. Even if yields rose modestly on Tuesday, they still were low enough to encourage corporations to issue debt. Eight corporate deals so far this week have produced a total of $15.8 billion of investment grade issuance.
The Federal Reserve's purchase of $6.677 billion in US Treasuries with maturities ranging from May 31, 2015 to September 30, 2016 was also supportive for the market. The Fed's purchases were part of its so-called quantitative easing program, dubbed QE2, a plan to buy $600 billion in Treasuries to spur economic activity. The buying is scheduled to end at midyear.