By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices slipped Tuesday, pushing yields up, as traders eyed Europe and waited for more important U.S. economic data coming this week.
Yields on 10-year notes 10_YEAR +3.18% , which move inversely to prices, rose 1 basis point to 1.99%. A basis point is one one-hundredth of a percentage point.
Thirty-year yields 30_YEAR +2.22% increased 2 basis points to 2.95%.
Yields on 2-year notes 2_YEAR +1.50% were little changed at 0.26%.
Treasurys remained down after the S&P/Case-Shiller 20-city composite home price index showed U.S. home prices fell 0.6% in September.
During the session, another report on U.S. home prices and consumer confidence will be released.
Italy managed to garner decent demand at an auction for its securities, though it paid among the highest yields since the euro’s EURUSD +0.05% inception. The auction initially boosted the shared currency against the dollar, signalling more comfort among investors with holding riskier assets including the euro. Read about dollar, euro.
Also, euro-zone finance ministers are set to meet Tuesday night in Brussels, which will be followed by a meeting of all European Union finance ministers on Wednesday.
“Treasurys continue to be held hostage to the dramatic headlines and rumors spilling over from Europe,” said David Ader, head of government bond strategy at CRT Capital Group.
However, 10-year yields will likely remain in the current range, which he defines as 1.88% to about 2.11%.
“The catalyst for such a break will only be obvious after the fact,” he said.
On Monday, Treasurys traded weakly after holiday shopping figures and renewed policy efforts in Europe buoyed appetite for stocks, following a big drop Friday. Analysts noted very thin trading volume and the unusual activity of bond and stock prices going in the same direction. Read about Treasury market on Monday.
“It seems to us that the robots (algorithmic traders) have taken over during U.S. trading hours as many domestic investors are on the sidelines due a lack of clarity/understanding and a general apathy around euro-zone issues," strategists at Nomura Securities wrote in a note.
“Volumes for both stocks and bonds are drying up quickly and we are afraid that until there is a euro-zone resolution (one way or another), such odd price action makes for choppy markets that defy long-standing relationships and logic.”
