Most US Treasury yields were little changed on Tuesday, holding in narrow ranges as traders awaited possible clues from the European Central Bank on its bond purchase program following its policy meeting on Thursday. There was no major news to weaken the widely held view the Federal Reserve would raise interest rates by a quarter point to 0.50-0.75 percent at its policy meeting next Tuesday and Wednesday.
Meanwhile, the selling of long-dated bonds around the world following Donald Trump's surprise US presidential win on November 8 has slowed, traders said. "The market is trying to be rangebound without bringing a new wave of liquidation," said Thomas Roth, head of US Treasury trading at MUFG Securities in New York.
Longer-dated yields edged up partly after Reuters reported the Italian treasury was mulling whether to raise its stake in Monte dei Paschi di Siena, Italy's third biggest lender. The bank needs to raise 5 billion euros by year-end to avert the risk of being wound down. "That helped reverse some of the risk-off sentiment at the longer end of the yield curve," said Ian Lyngen, head of US rates strategy at BMO Capital Markets in New York.
The benchmark 10-year Treasury yield was 2.394 percent, up 0.7 basis point from Monday, while the 30-year bond yield was 3.080 percent, up 2.5 basis points. Last week, longer-dated US yields reached their highest level since July 2015 on bets that Trump, the Republican president-elect, and a Republican-controlled Congress would enact big tax cuts and infrastructure spending and adopt stricter trade policies.
The US two-year note yield was 1.120 percent, down 0.4 basis point and not far below its highest level since April 2010 reached in late November. Traders and analysts expected US yields to bounce within tight ranges before the ECB's policy meeting on Thursday. Reuters reported last week the ECB would extend its quantitative easing beyond March to support the region's fragile economy, but would consider sending a signal that its bond purchases would end at some point.