MW: Treasurys improve after capital inflows, homebuilder data
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices posted very slight gains on Tuesday, pushing short-term yields down, after mixed data on homebuilder confidence, manufacturing and investor inflows let bonds erase earlier losses even as other indications of investors' appetite for risk improved.
Yields, which move inversely to bond prices, had been higher in earlier trading after the Federal Reserve Bank of New York said manufacturing conditions in the region improved this month.
Yields on 2-year notes (UST2YR 0.73, -.00, -0.54%) fell 2 basis points to 0.72%. A basis point is 0.01%.
Yields on 10-year notes (UST10Y 3.25, -0.01, -0.28%) slid 1 basis point to 3.25%, after having reached 3.31% earlier.
The Treasury Department's international capital report government said net foreign purchases of long-term U.S. securities totaled $110.9 billion in April, down from $157.7 billion in March. Read more on TIC data.
"Bond buying dipped a bit in April versus March, but nonetheless is way above the averages and ranks as the fourth highest buying month on record for Treasurys, said strategists at CRT Capital Group. "April only started the fear trade that was what May was all abou, so we'd expect to see better buying when the May data is released."
Yields also stayed down after the National Association of Home Builders' confidence index retreated more than economists expected.
Yields had been higher after the New York Fed's Empire State Manufacturing index edged higher to 19.6 in June from 19.1 in May, remaining solidly in positive growth territory but well off the high of 31.9 seen in April. See more on Empire index.
Yields had been higher in European trading hours as gains for equities in Europe and Asia lessened the investment appeal of the relative safety of U.S. debt.
That came even after a major German indicator of economic sentiment fell sharply this month. Germany is Europe's largest economy.
"All that the Treasury market has really done in recent days is to back away from major resistance and correct overbought conditions by chopping mostly sideways," said strategists at RBS Securities.
In late May, 10-year yields closed at 3.15%, the lowest level in about a year.
On Monday, Treasurys pared losses after Moody's Investors Service downgraded Greece to junk status, with most of the day's gains in U.S. stocks disappearing late in the session. Read about bonds, Greece.
