US Treasury prices rose on Monday, with long-dated maturities climbing significantly, after weaker-than-expected domestic data reignited the view that the Federal Reserve could slow the pace of interest rate hikes this year, increasing investor interest in safe-haven government debt.
Contracts to buy previously owned US homes fell to their lowest level in a year in January, likely weighed down by harsh weather and a shortage of properties for sale, a report by the National Association of Realtors showed. The Chicago Purchasing Manager Index, one of the leading indicators of the US economy, contracted to 47.6 in February, also causing investors to turn to Treasuries.
"Looking at recent data, as far as economic reports, it has been a mixed bag with this morning being weaker than anticipated," said Bill Northey, chief investment officer at the Private Client Group at US Bank in Helena, Montana. "Still, inflation expectations remain well-grounded and relative to other markets, the US has attractive yields."
Purchases of longer-dated Treasuries to meet expected month-end changes to portfolio benchmarks also pushed longer-dated bond prices higher, analysts said. "The long bond is doing well because you have considerable month-end extension," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. The benchmark 10-year note was last up 9/32 in price to yield 1.733 percent, down from 1.764 percent late on Friday.
The 30-year bond was last up 17/32 in price to yield 2.609 percent, down from 2.636 percent on Friday. Treasuries initially rose overnight after the Chinese central bank cut its reserve requirement ratio, or the amount of cash banks must hold as reserves for the fifth time this year, sending investors to the safety of US government debt.
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