NEW YORK: US Treasuries prices fell on Wednesday after Germany's top court backed the euro zone's new bailout fund, reducing demand for the safe-haven US bonds, and on disappointing results at a 10-year government note auction.
The Constitutional Court said Germany could ratify the European Stability Mechanism and budget pact as long as it could guarantee there would be no increase in German financial exposure to the bailout fund without parliamentary approval.
The decision, though expected, helped riskier assets rally and lowered yields on the government debt of Spain and Italy, which have struggled to contain a spike in their borrowing costs in recent months.
"This is one more hurdle the market needs to get over in order to continue to see Europe remain on the right path of trying to stabilize their situation," said Sean Murphy, a Treasuries trader at Societe Generale in New York.
In addition to the highly anticipated court decision, further selling in Treasuries emerged after mildly disappointing results at the $21 billion 10-year note sale, part of this week's $66 billion coupon-bearing supply.
The reopening of the 10-year issue originally sold in August fetched a yield of 1.764 percent, nearly 1 basis point higher than what traders had expected.
Bids from large investment funds and foreign central banks also came in below their recent averages, raising worries about the appetite for the $13 billion in 30-year bond supply for sale on Thursday, analysts said.
On the open market, benchmark 10-year notes were last down 16/32 in price to yield 1.758 percent, up 5.7 basis points from Tuesday and the highest yields since August 22.
Thirty-year bonds were down 1-11/32 in price to yield 2.921 percent, up 6.8 basis points from Tuesday's close and the highest since Aug. 21.
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