NEW YORK: US government debt prices fell on Monday as fewer worries about Europe reduced bids for lower-risk Treasuries and snapped their four-session winning streak ahead of this week's $99 billion in coupon supply.
Longer-dated Treasury yields retested their 200-day moving averages after German business sentiment unexpectedly improved for a fifth straight month.
Indications that Germany is prepared to allow two rescue funds to operate concurrently in an effort to bolster the firepower to combat the region's debt crisis also helped revive investor appetite for stock and other growth-oriented assets, analysts said.
"The outlook on Europe seems to be a bit better," said Andrew Shulman, a Treasuries trader at Wunderlich Securities in New York.
The Treasuries market retraced some of its initial losses after Federal Reserve Chairman Ben Bernanke expressed his concerns about the sluggish pace of US economic growth and historically high level of unemployment.
Bernanke's remarks rekindled some bets the US central bank would embark on a third round of quantitative easing in the form of more bond purchases, although Philadelphia Fed President Charles Plosser said earlier the Fed should not have the unfettered ability to purchase assets.
Market action was choppy on below-average volume. As of 10 a.m. (1400 GMT), Treasuries volume was running two-thirds of its 20-day moving average, according to ICAP.
Benchmark 10-year US Treasury notes fell 9/32 to yield 2.27 percent, up 4 basis points from Friday.
The 10-year yield was above its 200-day moving average of 2.2209 percent but below its 4-1/2-month peak of 2.399 percent set last Tuesday, according to Tradeweb.
The 30-year bond fell 30/32 for a yield of 3.36 percent, up 5 basis points from Friday. The 30-year is below its 4-1/2-month high of 3.4920 percent set last Monday and its 200-day moving average of 3.3717 percent.
At about 11 a.m. (1500 GMT), the Fed is scheduled to sell up to $8.75 billion in government debt due Feb 2013 to July 2013, which is a part of its $400 billion "Operation Twist" program aimed to help hold down mortgage rates and other long-term borrowing costs in a bid to foster economic growth.
Comments
Comments are closed.