By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices stayed lower Tuesday, pushing yields up, after the S&P/Case-Shiller index tracking home prices in 20 major U.S. cities showed a 1.7% increase in August from a year ago.
The main event of the session will be the government’s sale of 2-year notes, which traders worry will seem ever less appealing to investors in light of yields likely to set a new record low for an auction.
Yields on 10-year Treasury notes (UST10Y 2.61, +0.04, +1.68%) , which move inversely to prices, rose 4 basis points to 2.60%. A basis point is 0.01%.
Yields on 2-year notes (UST2YR 0.38, +0.02, +4.41%) increased 1 basis point to 0.38%, after recently touching an all-time low of 0.33%.
Bonds had been under pressure earlier after a report on U.K. gross domestic product had the effect of lowering expectations that the Bank of England would engage in quantitative easing. Read about U.K. economic growth for the third quarter.
“The Treasury market was modestly weaker overnight, owing in part to the better-than-forecast U.K. GDP,” said strategists at CRT Capital Group.
Still to come is a U.S. report on consumer confidence.
Also, the Federal Reserve will hold another operation in its program to roll cash over into U.S. bonds as mortgage-related debt in its portfolio matures. It will buy debt maturing from 2021 to 2040. See more on recent Fed buybacks.
Analysts at RBS Securities expect the Fed to buy about $2.7 billion.
And at 1 p.m. Eastern time, the Treasury Department will announce the result of its sale of $35 billion in 2-year notes. The amount is $1 billion less than last month’s auction. See recent auction results.
“We believe the auction, in this sort of low-rates-forever environment, will go OK but not as good as last month’s,” said strategists at Nomura Securities.
