US Treasuries prices slipped on Thursday on continued optimism that Greece would avert a debt default, even as the country failed again to clinch a deal with its international creditors. Euro zone finance ministers ended their third meeting in a week without agreement after the three creditor institutions put a final cash-for-reform proposal on the table in a showdown with Athens's leftist government.
Without a deal by the weekend to unlock frozen aid, Greece is set to default on a crucial repayment to the International Monetary Fund next Tuesday. While the failure to reach a deal capped losses in safe-haven US government bonds, optimism that a deal could be reached by Saturday weighed on Treasury prices. "There's still certainly some optimism," said Aaron Kohli, interest rate strategist at BNP Paribas in New York. "I don't think anyone in the market has a baseline expectation that (Greece) will default."
Thursday's price losses curbed Wednesday's rally in prices after a roadblock in negotiations crimped demand for safe-haven US government debt. While yields on benchmark 10-year notes and 30-year bonds remained within recent ranges on Thursday, yields on Treasuries maturing between three and seven years hit their highest levels in over a week. Analysts said solid demand at the Treasury's auction of $29 billion in seven-year notes also limited losses in Treasuries prices. The Treasury sold the notes at a yield of 2.153 percent, the highest level since September, Treasury data showed. The auction marked the final round of this week's $90 billion in new supply. US 30-year Treasuries were last down 8/32 in price to yield 3.16 percent, from a yield of 3.15 percent late Wednesday. Benchmark 10-year notes were last down 6/32 to yield 2.39 percent, from a yield of 2.37 percent late Wednesday. Seven-year notes were last down 4/32 to yield 2.12 percent, from a yield of 2.10 percent late Wednesday.
