By Sara Sjølin, MarketWatch
NEW YORK (MarketWatch) — Treasury prices pared gains Monday, taking pressure off yields, after the Treasury Department said the value of foreign investors’ purchases of U.S. long-term assets declined in May from previous months.
Yields on 10-year notes 10_YEAR -0.55% were down 1 basis point to 2.90%, paring a 4-basis-point loss earlier in the session.Yields on 2-year notes 2_YEAR +1.10% were flat around 0.36%.
Yields move inversely to prices. A basis point is 1/100th percentage point.
The Treasury Department said that foreign investors bought a net $23.6 billion of long-term U.S. assets in May, down from $30.6 billion in April.
Further, net inflows into long-term U.S. assets averaged $32.14 billion over the first five months of the year, half the average of $65.2 billion for all of 2010.
“We look at longer-term trends and normally take the data with a grain of salt,” said Michael Pond, Treasury strategist at Barclays Capital. “But the data wiped out some of the gains.”
Overnight, Treasurys were pushed higher as Friday’s banking stress tests failed to inspire investor confidence and reduce concerns that Europe’s debt crisis will deepen, attracting investors to safer havens such as Treasurys.
The European Banking Authority’s long-awaited stress tests showed that eight banks failed, but most analysts identified much bigger shortfalls than the official results and criticized the tests for failing to include the scenario of a Greek debt default.
Later this week euro-zone leaders will meet to finalize a bailout package for Greece and prevent the debt crisis from worsening.
