By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices declined further Friday, pushing 10-year yields up from three-week lows, after a government report said U.S. durable-goods orders improved in certain sectors last month.
Bond traders also played off a separate Commerce Department report showing sales of new homes held steady in August from July, although this meant the nation’s housing market remains in a decidedly weak state.
Yields on 10-year notes (UST10Y 2.61, +0.06, +2.47%) , which move inversely to prices, rose 6 basis points to 2.60%. A basis point is 0.01%.
Yields on 2-year notes (UST2YR 0.44, +0.03, +5.96%) increased 2 basis points to 0.44%.
Economic data should stay fairly subdued, limiting any decline in Treasury prices, said Tom di Galoma, head of U.S. rates trading at Guggenheim Partners.
“We would also like see a bit of a sell-off ... as the market has rallied 40 basis points from the recent high yields,” he said.
Earlier, the Commerce Department reported that durable-goods orders fell 1.3% overall last month. However, August orders excluding transportation rose, as did a measure of orders considered a gauge of capital spending by businesses. Read about durable-goods orders.
That gauge will add to the reading for third-quarter gross domestic product, said strategist at CRT Capital Group.
Before U.S. market hours, Treasurys had traded mixed, with short-term yields rising and long-term yields declining. Influencing the trading were a report that German business confidence improved as well as suspicions that Japan had intervened in foreign-exchange market again. Read about dollar, yen.
Still to come Friday, the Federal Reserve will be buying Treasurys maturing from 2014 to 2016, part of the central bank’s pledge to reinvest cash from maturing mortgage-backed securities and housing-agency debt back into the bond market to support the economic recovery.
On Thursday, 10-year Treasury yields touched the lowest in three weeks, aided by worries about the financial health of Ireland and some weak U.S. data.
Yields on 2-year notes hit a record low and have declined in eight of the last nine sessions.
