Treasuries slip

US Treasury debt prices slipped on Tuesday as signs of a pickup in US consumption encouraged investors to buy stocks, though worries about the outcome of the eurozone debt crisis kept markets cautious. Treasuries extended losses after data showed US consumer confidence rebounded more than expected in November, further undermining Treasuries' safe-haven allure.
Treasury prices rose briefly in the afternoon after Fitch Ratings said Britain's ability to absorb economic shocks without losing its AAA rating is "largely exhausted," unless the government takes further deficit-reduction measures. In another sign of Europe's fiscal challenges, Italy was able to sell 7.5 billion euros of debt, easing concerns about its access to capital markets, but its borrowing costs soared to record highs close to 8 percent.
Late in the afternoon, benchmark 10-year notes were trading 9/32 lower in price to yield 2.0 percent, up from 1.98 percent late Monday. Thirty-year bonds were trading 19/32 lower in price to yield 3.96 percent, up from 2.94 percent late Monday. Ten-year yields have been locked in a range of 15 basis points on either side of 2 percent since the beginning of November, as investors monitor developments in Europe in an effort to gauge the potential global impact of the crisis. Euro zone finance ministers are set to agree on details to bolster the region's bailout fund at key summits this week and the next to try to stem contagion in bond markets.
Hopes of decisive measures to deal with the eurozone crisis coupled with signs of stronger US consumption during the Thanksgiving weekend have encouraged investors to look for higher-yielding alternatives to Treasuries. Adding to economic optimism spurred by reports of increased retail sales over the weekend was data on Tuesday showing US consumer confidence bounced back from a 2-1/2-year low in November as apprehension about job and income prospects eased.
The Conference Board, an industry group, said its index of consumer attitudes jumped to 56.0 from a upwardly revised 40.9 in October. It was the highest level since July and handily topped economists' forecasts for a reading of 44.0. The S&P/Case Shiller composite index of home prices in 20 metropolitan areas for September fell 0.6 percent from August on a seasonally adjusted basis. A Reuters poll of economists had forecast no change. Prices in August were revised to show a decline of 0.3 percent after originally being reported as unchanged.