U.S. selling 10-year notes later in Wednesday’s session
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices declined for the first day in six Wednesday, giving back some of the prior session’s rally and pushing yields back to levels not seen since before the Federal Reserve’s last policy meeting more than a month ago.
Yields on 10-year notes 10_YEAR +2.42% , which move inversely to prices, rose to 2.03% from 1.98% in late North American trading on Tuesday — the first time the yield on the benchmark security closed below 2% since March 7.
Thirty-year-bond yields 30_YEAR +1.72% increased to 3.18% from 3.14%.
Yields on 5-year notes 5_YEAR +3.76% traded at 0.88%, up from 0.85%, which was also their lowest closing level in more than a month.
Bonds rose on Tuesday as Spanish debt yields jumped, reviving worries about Europe’s sovereign-debt problems and weighing heavily on equities. Read about bond rally Tuesday.
The rally in Treasurys in the last five sessions — starting even before the disappointing U.S. payrolls report for March — has brought yields back to a lower range that they had been in for months, in large part due to the European debt worries and to economic contraction being exacerbated by austerity measures.
“The market has returned to the same range seen before the March 13 FOMC meeting — which was also accompanied by the resolution of the Greek default saga,” said bond strategists at CRT Capital Group.
The range on 10-year yields has returned back to 1.90% to 2.08%, according to CRT. They rose as high as 2.38% on March 19.
Bond traders are also preparing for the government’s auction of 10-year notes, which will close at 1 p.m. Eastern time.
“Treasurys have given back a chunk of yesterday’s [Europe]-fueled gains as the U.S. Treasury prepares to offer a slug of long-end paper over the next two days,” said Bill O’Donnell, head of Treasury strategy at RBS Securities.
The auction is the second of three major sales scheduled by the government for this week. On Tuesday, the U.S. received decent demand for 3-year notes 3_YEAR +5.54% ; it will sell 30-year bonds on Thursday.
At 2 p.m. Eastern, the Fed will release it’s Beige Book, an anecdotal compilation of on-the-ground conditions about the economy.
