US Treasuries prices fell on Wednesday as hopes for a Greece debt deal prompted investors to pare safe-haven bids, while a stronger-than-expected report on private jobs growth revived bets on a Federal Reserve rate hike later this year. A poor five-year German Bobl note auction stoked selling in core European fixed-income. Analysts said this spilled into the US bond market, which had had just finished its worst quarter in two years in terms of total returns.
Greek Prime Minister Alexis Tsipras has told international lenders his government could accept their bailout offer if some terms were changed in advance of a Sunday referendum on the aid-for-reforms deal. Tsipras urged Greeks to reject the conditions of a bailout in a bid to force creditors to loosen terms.
"A 'no' vote adds more ambiguity. That's a bigger negative for markets," said Jim Caron, fixed-income portfolio manager at Morgan Stanley Investment Management in New York.
Still traders viewed these latest developments on balance as progress toward a solution that keeps Greece in the euro zone and averts strain on world-wide financial markets.
In late US trading, benchmark 10-year Treasuries notes were down 25/32 in price to yield 2.424 percent, up 9 basis points from Tuesday.
The 30-year bond fell 1-26/32 in price, yielding 3.202 percent up 10 basis points from Tuesday.
The US Treasuries market lost 1.58 percent in the second quarter, its biggest drop since a 1.92 percent loss in the second quarter of 2013, according to an index compiled by Barclays.
Upbeat domestic economic data also spurred selling in Treasuries.
Payrolls processor ADP said US companies added 237,000 jobs in June, the most since December.
The Institute for Supply Management said its index of national manufacturing activity rose to 53.5 in June, the highest level since January, while the government said construction spending rose 0.8 percent in May to its highest level in just over 6-1/2-years.
Evidence the US economy is rebounding from its first-quarter slowdown could give the Fed more impetus to hike interest rates from near-zero levels, analysts said.
These reports came a day before the government's payrolls report for June. Economists polled by Reuters expected that employment growth slowed to 230,000 jobs in June from 280,000 in May. The unemployment rate was forecast to slip to a seven-year low of 5.4 percent from 5.5 percent.
US financial markets will close on Friday for the Fourth of July holiday.