By Deborah Levine and Greg Morcroft, MarketWatch
NEW YORK (MarketWatch) — Treasury prices increased on Monday, pushing yields down from their highest since late May, as U.S. equities gave back some of their recent rally, modestly boosting demand for U.S. government debt.
Yields on 10-year notes 10_YEAR -1.50% fell for a second day, by 2 basis point to 1.64%. Bond prices move inversely to their yields.
Yields on 30-year bonds 30_YEAR -1.16% declined 3 basis points to 2.72%.
Five-year note yields 5_YEAR -2.24% slipped 1 basis point to 0.70%.
Last week, which included a quarterly trio of U.S. government note and bond auctions, yields rose for a third week. Read about Treasury market last week.
Supporting interest in riskier assets, many investors still expect the Federal Reserve and European Central Bank to ease monetary conditions further, including potentially by buying bonds, if economic conditions deteriorate.
“The main factors behind the low interest rate environment — the sluggish pace of the recovery, easing by the Federal Reserve, and the European crisis — have not meaningfully changed,” said Zach Pandl, senior interest-rate strategist at Columbia Management,
Consequently, the recent sell-off is unlikely to “mark the beginning of sustained weakness in the rates market.”
U.S. stocks declined, following weeks of gains, with the S&P 500 Index SPX -0.50% losing 0.5%. See story on U.S. stocks.
Major European benchmark indexes also lost ground. Read about Europe stocks.
Key coming events include the Fed’s annual retreat in Jackson Hole, Wyo., later this month, and U.S. and European Central Bank meetings in September.
There was no U.S. economic data on Monday’s calendar, but Tuesday brings reports on retail sales and producer prices. The consumer price index, housing starts and industrial production are all also due this week.
Expectations for the data are “skewed to at least modest improvement,” said David Ader and Ian Lyngen, bond strategists at CRT Capital Group. “That tempers our otherwise bullish reversal view, but does not eliminate it. We like the levels outright” on yields and the lack of debt sales should support the market.
Deborah Levine is a MarketWatch reporter, based in New York.
Greg Morcroft is MarketWatch's financial editor in New York.
