By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices fell on Tuesday, pushing 10-year yields briefly back above 2%, as better data in Europe and rising equities depleted interest in the relative safety of U.S. bonds on the first trading day of the year.
“We suppose the glib thinking is that it’s a New Year and you’re supposed to start with risk on the books and justify that afterwards, so perhaps, indeed, we’ll start with a bit of bond-market pressure,” said bond strategists at CRT Capital Group.
“If so, it’s surely going to be limited because to the best of our knowledge so little has changed to lend encouragement to the factors that kept yields low into year end,” they wrote in a note.
Yields on 10-year notes 10_YEAR +4.27% , which move inversely to prices, erased the last week of declines by rising 11 basis points to 1.99%. A basis point is one one-hundredth of a percentage point.
Yields on 30-year bonds 30_YEAR +3.12% added 8 basis points to 2.98%.
Two-year-note yields 2_YEAR +6.48% added 2 basis points to 0.27%.
The Institute for Supply Management’s report on U.S. manufacturing releases at 10 a.m. Eastern time and is expected to show an improvement for December.
“The focus will continue to be on the degree of decoupling from Europe where problems remain extreme and debt rollover for peripheral governments and financials in the first quarter will be the major hurdle to be overcome,” said Richard Gilhooly, U.S. director of interest-rate strategy at TD Securities.
U.S. stock-index futures rose more than 1%, while the Stoxx Europe 600 index XX:SXXP +0.52% gained 0.5%
Also on tap, the Federal Reserve will release minutes from its last policy meeting. The minutes are due for release at 2 p.m. Eastern.
Treasurys of all maturities returned 9.8% last year, according to an index compiled by Bank of America Merrill Lynch. It was the strongest gain in three years. Read about Treasury rally in 2011.
