MW: Treasurys retreat as Senate debates stimulus plan
Expectations for growing government-debt sales on the front burner
Treasury prices mostly fell Tuesday, pushing the yields on longer-dated debt higher, as investors monitored progress on the economic-stimulus bill before Congress and braced for rising issuance of government securities.
"Supply is still the overriding fear in the Treasury market for the next week or so," said Tom di Galoma, head of U.S. government-bond trading at Jefferies & Co.
Ten-year note yields ) rose 3 basis points to 2.75%. A basis point is 0.01%.
Yields on the securities have increased in 9 of the last 11 trading days. Bond prices move inversely to their yields.
Shorter-term prices were supported in early action by expectations that the U.S. economy will continue to be weak for some time, boosting the appeal of the government debt as a relatively safe investment.
Two-year note yields fell 1 basis point to 0.89%.
Republicans kept up their drumbeat of calling for greater housing aid and deeper tax cuts to be part of the Obama administration-backed bill that began moving through the Senate on Monday, while Democrats sought to boost infrastructure spending. See latest story on stimulus plan.
Also on bond traders' radar screens, the Treasury Department will announce on Wednesday the sizes and terms of its quarterly refunding auctions scheduled for next week.
The government said Monday it expects to borrow $493 billion in the current quarter, 25% more than the amount estimated three months ago.
Wrightson ICAP, a research firm that specializes in government finance, forecasts that the government will sell $32 billion in three-year notes, $22 billion in 10-year securities and $15 billion in 30-year bonds.
Traders also kept an eye out for what data on the status of pending home sales in December would show. Pending home sales are considered a leading indicator for purchases of existing homes.
Some analysts say pending sales may come in flat after having sustained a 4% drop in November.
Such stabilizaton would reflect the impact of lower mortgage rates as well as discounts due to rising foreclosures. The data are due at 10 a.m. Eastern time.
"Although the economic environment and distressed mortgage market contribute to weak sales, we do believe that deep discounting from foreclosures has enticed some homebuyers," analysts at Barclays Capital wrote in a research note.
