LONDON: US bond prices stabilised in European trade on Wednesday, supported by investor doubts this week's European Union summit will deliver decisive measures to contain the region's debt crisis.
German Chancellor Angela Merkel dashed any hopes of a quick move towards common euro zone bond issuance - favoured by France, Italy and Spain - after she was quoted as saying Europe would not share total debt liability in her lifetime.
"I still want to be a buyer of Treasuries as any hope around this summit towards the end of the week was erased with Merkel's comments yesterday. I don't think she could have been any more direct or pointed in those comments," a trader said. "We're seeing mostly buying on pullbacks and very little selling."
US T-note futures edged up 2/32 to 133-16/32 while benchmark 10-year T-note yields were at 1.62 percent, little changed from late New York levels.
In addition, investors remained concerned by the US economic slowdown and this is likely to keep demand for bonds intact at remaining auctions later this week. Although Treasury yields rose briefly on Tuesday after data showing a rise in US single-family home prices, unexpectedly weak consumer confidence in June offset that impact.
The Treasury will sell five- and seven-year notes on Thursday for a total $99 billion. The five-year T-note yielded 0.73 percent in the grey market compared with 7.22 percent yield on the current five-year note in the secondary market.
The seven-year T-note yield held steady at 1.09 percent while the 30-year T-bond yielded 2.70 percent, also unchanged from late US levels.
"Once we take these auctions down I expect lower yields going into the weekend on continuing Europe disappointment," the trader said.
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