MW: Treasurys decline after Bernanke remarks, before auction
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices slipped Tuesday, pushing yields higher, as bond traders got ready for the sale of $36 billion in 3-year notes, the first of three government debt auctions scheduled for this week.
Traders also noted that comments made late Monday by Federal Reserve chief Ben Bernanke, who said he didn't expect to see a double-dip recession in the U.S., had the effect of supporting stocks.
Yields on 10-year notes (UST10Y 3.18, +0.03, +0.92%) rose 2 basis points to 3.17%. Bond prices move inversely to yields and a basis point is 0.01%.
Yields on 2-year notes (UST2YR 0.73, +0.02, +2.23%) increased 1 basis point to 0.73%.
"Today's big Treasury market focus will be the first leg of this week's three coupon auctions," said strategists at RBS Securities. "The global flight-to-quality continues and demand has held up very well despite Treasury rates being at their 1-year range lows."
Yields near record lows may mean the government has to pay a slightly higher yield in the sale of 3-year notes (UST3YR 1.16, +0.03, +2.38%) , they said. Bids are due at 1 p.m. Eastern time.
The Treasury Department will sell $21 billion in 10-year notes on Wednesday and $13 billion in 30-year bonds (UST30Y 4.12, +0.03, +0.83%) on Thursday.
Bernanke's comments were generally read as hawkish, analysts said. In particular, he noted interest rates would need to rise before the employment picture improves. Read more about Bernanke's remarks in Washington.
That still means the Fed is unlikely to raise rates any time soon, strategists at CRT Capital Group said.
The nation's unemployment rate stood at 9.7% in May, and may rise anew after the Census Bureau no longer needs the temporary workers it's hired recently, they wrote in a note. And the "full" employment rate is closer to 5%.
"The Fed has rather ample leeway before hiking," CRT's David Ader and Ian Lyngen said. "We have no precedence for the Fed hiking with the unemployment rate over 8% in the last 30 years and we don't think we're getting one this time around."
