MW: Treasurys slip as Europe sentiment ticks higher
$35 billion sale of 5-year notes on deck
By Laura Mandaro, MarketWatch
SAN FRANCISCO (MarketWatch) -- Treasurys slid Wednesday, sending yields on longer-dated maturities higher, as an undercurrent of hope that European policymakers would prevent a full-blown euro crisis pulled investors into stocks and away from cash and bonds.
Yields on the 10-year Treasury 10_YEAR +3.20% rose 9 basis points to 2%. Yields on the 30-year bond 30_YEAR +1.50% added 8 basis points to 3.08%. Prices trade inversely to yields, and one basis point is 1/100th of a percentage point.
Shorter-term maturities traded close to flat. Yields on the 2-year note 2_YEAR +6.15% were unchanged from the prior session at 0.24%.
Treasurys have been falling for the past four days as prospects -- however faint -- that European leaders could leverage the European Financial Stability Facility to buy up distressed European sovereign debt improved sentiment and lured investors back to stocks.
So far this week the Dow Jones Industrial Average DJIA +0.12% has gained 4.8%. The Global Dow GDOW -0.62% has surged 5.2%. The dollar index DXY -0.10% has fallen more than 1% and edged lower Wednesday to 77.59.
“Today’s action will continue to be driven by how Europe’s headlines impact stocks,” said David Ader, head of government bond strategy at CRT Capital Group, in emailed comments.
Late Tuesday, the Financial Times reported there was a growing split in the euro-zone over the terms of Greece’s $148 billion bailout, whose framework was drawn up in July. New calls for private creditors to take a larger loss on the debt restructuring add to doubts that leaders will be able to move towards an even bigger debt protection scheme. But those fears weren’t enough to sway a four-day shift into stocks.
Plus, said RBS Securities analysts, there are “elevated and immediate concerns about portfolio rebalancing flows out of bonds and into stocks as we go into quarter end.”
Still to come, the Treasury Department will announce results from its auction of $35 billion in 5-year notes.
