By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose Tuesday, pushing 10-year yields down for the first day in six, as renewed worries about the viability of a second bailout of Greece came under more scrutiny from rating agencies and fueled a modest shift in demand for the relative safety of U.S. debt.
Yields on 10-year notes 10_YEAR -1.23% , which move inversely to prices, fell 4 basis points to 3.16%. A basis point is 1/100th of a percentage point.
Yields on 2-year notes 2_YEAR -6.57% declined 4 basis points to 0.45%.
Thirty-year bond yields 30_YEAR -0.64% also slipped, off by 2 basis points to 4.37%.
Standard & Poor’s said the leading proposal under consideration regarding debt-ridden Greece would likely bring the country into default, according to The Wall Street Journal. See story on Greece in The Wall Street Journal.
“Treasurys have rebounded over the long weekend after S&P warned that the French bond plan for Greek debt could constitute a default,” said bond strategists at RBS Securities.
The only economic data on tap Tuesday are a report on factory orders for May, but investors’ attention will remain more focused on Friday’s monthly employment report for June.
Last week, benchmark 10-year yields rose for the first week in six, as investors breathed a sigh of relief about rising support for the plan put forth by French banks to keep Greece from defaulting. Ten-year yields also rose by the most last week since August. Read about Friday’s bond selloff.
Closer to home, a report on manufacturing activity unexpectedly improved, further reducing the need for fixed-income securities as a buffer against an economic slump.
“Despite the sell-off, we believe the U.S. economy remains soft and bonds should not sustain a meaningful sell-off unless market expectations for rate hikes are validated by a turn in the data,” said George Goncalves, bond strategist at Nomura Securities, in a note.
