US Treasuries prices fell on Monday, and yields hovered at their highest levels in more than four months, as investors further pared bond holdings on signs of an improving US economy and some stabilisation in Europe's debt troubles. The US government debt market last week suffered its worst week since last June, as pension funds, insurance companies and other large fund managers began re-allocating money into stocks and other growth-oriented investments.
"Demand for riskier assets is still strong," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia. On Wall Street equities extended last week's rally, buoyed by Apple Inc's announcement that it will pay a dividend and buy back stock. The Standard & Poor's 500 index was less than 10 percent below its all-time closing high reached in October 2007.
The fall in Treasury prices put benchmark yields on track for a ninth straight session of gains. Although yields were below the peak of 2.36 percent hit on Friday, their break above their 200-day moving average last week suggested they could rise further.
According to Barclays Capital, its Treasury total return index fell 1.12 percent last week, the biggest single-week drop since a 1.47 percent fall in late June. LeBas estimated last week's drop shaved $61 billion in value from the Treasuries market. There were $10.2 trillion of government debt securities outstanding at the end of February, which could be traded by the public, according to the US Bureau of the Public Debt.
The bond market's dramatic breakout from a tight trading range since late last year has fuelled speculation that it is on the brink of a protracted bear market. The bond market retraced its losses earlier on the Federal Reserve's purchase of $5.1 billion of long-dated Treasuries and slightly disappointing data on US home builder sentiment.
Benchmark 10-year Treasury notes last traded near their session lows, down 15/32 in price at 97 to yield 2.35 percent, up 5 basis points from late on Friday. The 10-year yield was a hair below the 2.36 intraday high set last Friday, which was the highest level since October 28 when it peaked at 2.42 percent, according to Tradeweb. The 30-year bond was last down 24/32, yielding 3.45 percent, up 4 basis points from Friday and within striking distance of the 3.49 percent peak touched last Thursday.