MW: Treasurys fall on durable-goods orders, Fed concerns
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Treasurys prices extended a loss and the dollar stayed lower on Friday after a government report showed a key measure of business spending jumped last month, adding to evidence the economy is recovering and reducing the appeal of the relative safety of U.S. debt.
Yields on 10-year Treasury notes (UST10Y 3.77, +0.04, +0.94%) , which move inversely to prices, rose 4 basis points to 3.82%. A basis point is 0.01%.
Yields on 2-year notes (UST2YR 1.02, +0.02, +2.41%) increased 2 basis points to 1.06%.
Orders of durable goods dropped 1.3% in March, the Commerce Department said. Excluding volatile transportation goods like aircraft, orders rose 2.8%.
Orders for core capital equipment goods -- the kinds of equipment businesses invest in to maintain or expand their productive capacity -- rose 4%, the largest increase since June. Read about durable-goods orders.
"Such a gain, which follows February's 2.1% jump, continues to suggest that businesses are reinvesting as the economy continue to turn," said Dan Greenhaus, chief economic strategist at Miller Tabak.
Still to come is a report on sales of new homes, which economists surveyed by MarketWatch expected to improve to a 335,000 pace in March from 308,000 in the prior month.
Treasury prices were under pressure earlier after media reports indicating that more members of the Federal Reserve want to begin selling some of the government and mortgage-related assets it bought during the credit crisis, though analysts indicate near-term sales are unlikely.
At least six members of the policy-setting board favor selling assets to reduce the Fed's bloated balance sheet, according to news reports citing CNBC. The "headlines are getting attention this morning and weighing on the Treasury market," said strategists at CRT Capital Group.
They note that markets know that some Fed officials favor near-term asset sales, and have said so publicly. But Fed Chairman Ben Bernanke "and the balance of the voters are opposed to the concept, so we're cautious of making too much from the CNBC chatter."
The Federal Open Market Committee meets next week, and is expected to keep interest rates steady at a range of zero or 0.25%.
