US Treasuries prices rose on Tuesday after weak corporate results hurt US stocks and fuelled demand for safe-haven US government debt, while expectations that the Federal Reserve could hike rates in September capped gains. With the focus shifting away from Greece's debt issues and little in the way of new US economic data, traders reacted to weakness in US shares after disappointing corporate reports from IBM and United Technologies.
"You're starting to see companies that just aren't hitting their earnings estimates, and you get this jolt down in equities and risk off and transfer of funds into the bond market," said Justin Hoogendoorn, fixed income strategist at BMO Capital Markets in Chicago. "You just get a little bit more pure of a reaction when there's less data to deal with," he added.
Treasuries prices reversed losses sustained earlier in the session, which analysts had attributed to expectations that the Fed could hike rates in September and reduced demand for safe-haven bonds on greater relief surrounding Greece. Anticipation that the Fed could hike rates in September still kept a lid on gains in Treasuries prices in afternoon trading, analysts said. The Fed is scheduled to meet next week.
"People are still thinking that September, at the very least December, is likely when the Fed is going to raise rates," said Michael Temple, portfolio manager at Pioneer Investments in Boston. "With that sitting in the background, it's kind of hard for Treasuries to rally dramatically." Benchmark 10-year Treasury notes were last up 8/32 in price to yield 2.35 percent, from a yield of 2.37 percent late Monday. US 30-year bonds were last up 13/32 to yield 3.08 percent, from a yield of 3.11 percent late Monday. US three-year notes were last up 2/32 to yield 1.06 percent, from a yield of 1.09 percent late Monday. Three- and two-year yields earlier hit 19-day highs of 1.105 percent and 0.714 percent, respectively.
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