Data may offer direction in thin volume, analysts said
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices recovered gains on Tuesday, pushing 10-year yields down from a three-week high, after the first of two U.S. economic reports showed October home prices fell 1.2%.
Analysts said very thin trading volumes could be the catalyst of price action more than particular news or data.
Yields on 10-year notes 10_YEAR -1.03% , which move inversely to prices, slipped 1 basis point to 2.02%, coming off it’s their highest level on a closing basis since Dec. 9. A basis point is one-hundredth of a percentage point.
Yields on 30-year bonds 30_YEAR -0.62% were little changed at 3.06%.
Two-year-note yields 2_YEAR +2.76% traded at 0.29%, their highest levels since mid-November.
On tap is a report on consumer confidence in December, at 10 a.m. Eastern time.
Bond markets were closed Monday in observance of Christmas. The U.K. and some smaller markets remain closed for Boxing Day.
“Compressed between two long-holiday weekends, including the U.K.’s Boxing Day celebration overnight, this final trading week of the year is unlikely to offer any paradigm-shifting insights that will materially alter trading biases into the New Year,” said David Ader and Ian Lyngen, bond strategists at CRT Capital group.
“That is not to suggest the price action doesn’t hold the potential to prove sharp and extend last week’s sell-off, but rather that in light of the anemic trading volumes and broader absence of conviction into year-end, we’ll be reluctant to attempt extracting much meaning from the process of closing the books on 2011,” they wrote in emailed comments.
On Friday, Treasury prices fell, in part as equities gained following decent U.S. economic data. CRT analysts note that bond-trading volumes were at their weakest levels of the year. Read about Treasury bonds on Friday.
Treasurys of all maturities have lost 0.7% this month, according to an index compiled by Bank of America Merrill Lynch. For the year, Treasurys have returned 8.9%, following last year’s 5.9% gain.
This year’s return is higher than that of corporate bonds, which returned 6.2%. High-yield bonds are up 3.9%, while the U.S. equity benchmark Standard & Poor’s 500 Index SPX +0.90% is up just 0.6%.
