By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices fell Monday, pushing yields up from historic lows touched recently, as traders eyed gains in stocks and positioned for a trio of U.S. government auctions this week.
Yields on 10-year notes 10_YEAR +2.86% , which move inversely to prices, rose 5 basis points to 2.12%. A basis point is 1/100th of a percentage point.
The yield on the securities, which are the benchmark for a broad swatch of corporate and consumer borrowing rates, including mortgages, fell to 1.97% on Aug. 18, the first time they’ve fallen under 2% in several decades.
Yields on 30-year bonds 30_YEAR +0.74% increased 3 basis points to 3.42%.
Two-year note yields 2_YEAR +6.06% added 1 basis point to 0.21%, touching their highest level since Aug. 9.
“This week opens with Treasurys under modest pressure overnight as global equities have stabilized – a move more consistent with a bounce off the lows in stocks and a slight retracement of the recent highs for bonds than a broader reversal of a trending market,” said Ian Lyngen, a bond strategist at CRT Capital Group.
Last week, 10-year yields fell for a fourth straight week. So far this month, they’re down by the most in any month since late 2008, when the credit crisis was hitting markets the hardest. Read about Treasury rally last week.
The main event for the week will be Federal Reserve Chairman Ben Bernanke’s speech Friday in Jackson Hole, Wyo. Markets seem to be trading as if he’ll announce new measures to stabilize the economy, but analysts consider that highly unlikely and predict investors will be disappointed. Read more about Bernanke, Jackson Hole.
Markets were full of anticipation ”of further policy from Bernanke this coming Friday which is boosting U.S. equity futures, anticipation that authorities would intervene in the [Japanese] yen and Swiss franc, and anticipation of further policy measures out of Europe,” said bond strategists at RBS Securities. “Markets moving on anticipation leave themselves vulnerable to disappointment.” Read about currency intervention, European debt.
The Treasury Department will auction 2-year notes Tuesday, followed by 5-year notes 5_YEAR +4.89% on Wednesday and 7-year notes 7_YEAR +4.16% on Thursday.
Traders typically try to sell existing holdings of a to-be-sold maturity in order to be able to bid on the newest, most liquid debt at a lower price.
“We’ll look to this week’s takedowns as a challenge to this new lower-rate environment — one we generally expect will not present a problem but risks requiring something of a concession,” CRT analysts wrote in a note.
