Overseas, U.S. data and Fed comments also share spotlight
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices were mostly lower on Tuesday, pushing yields up for a ninth day, as traders balance an approaching auction of 5-year notes with U.S. economic data, Japan’s struggle to contain radiation from an earthquake-damaged nuclear plant, and comments from Federal Reserve officials focusing on normalizing their ultra-easy monetary policy.
Yields on 10-year notes (UST10Y 3.46, +0.02, +0.49%) , which move inversely to prices, rose 1 basis point to 3.46%. A basis point is 0.01 percentage point.
Yields on the benchmark securities have risen for nine days, the longest string since at least 2002.
Yields on 2-year notes (UST2YR 0.80, +0.02, +2.43%) were little changed at 0.79%.
Treasurys took no direction from the S&P/Case-Shiller home-price index, which fell 1% in January. See more on home price index.
Still to come is a report on consumer confidence. Also, the Fed will hold another buyback.
The Treasury Department will sell $35 billion in 5-year notes (UST5YR 2.20, +0.02, +0.87%) , with bids due at 1 p.m. Eastern time.
“For rates, the upside continues to be the deteriorating situation at the stricken Japanese nuclear-power plant as well as other geopolitical news around the globe,” said strategists at Nomura Securities.
“On the negative side, a weak auction could certainly put pressure on rates, but the overriding theme is still likely to be the nonfarm-payrolls number on Friday.” See story on Japan;'s nuclear plant.
Economists expect Friday’s employment report to show another solid increase in the number of jobs the economy created in March.
On Monday, the government’s sale of 2-year notes drew tepid demand from investors. Read more on 2-year note auction.
Fed speakers, buybacks
Early Tuesday, St. Louis Federal Reserve Bank President James Bullard said the debate over the Fed’s exit from ultra-accommodative monetary policy is likely to be a key issue in 2011 and might not wait until rising global macroeconomic uncertainties are resolved. Read more from Fed’s Bullard.
He even favored cutting short the Fed’s purchases, stopping at $100 billion below the Fed’s original target of buying up $600 billion in Treasurys, according to Dow Jones Newswires.
The Fed’s so-called second round of quantitative easing also includes reinvestment of its maturing mortgage-related debt into Treasurys, which analysts said could add another $200 billion or so in purchases.
Through Monday, the Fed has bought $548 billion in U.S. notes and bonds, according to Morgan Stanley.
Boston Fed President Eric Rosengren, Philadelphia Fed chief Charles Plosser and Elizabeth Duke, on the Fed’s board of governors, have also given speeches in the past week.
“The recent comments from two hawkishly leaning Fed presidents, Bullard and Plosser, have garnered the lion’s share of market attention,” strategists at RBS Securities wrote in a note.
“Meanwhile, few have directed attention to the more dovish leaning comments from Fed Governor Duke (worried about households) and Boston’s Rosengren (warns about taking up austerity too quickly; need to cut slack first).” Read more from Fed’s Rosengren.
