By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose for the first day in five on Monday, pushing yields down, after last week’s big selloff pushed yields above the range they had been in for months.
Yields on 10-year notes 10_YEAR 0.00% , which move inversely to prices, fell 2 basis points to 2.28%. A basis point is one-hundredth of a percentage point.
Thirty-year-bond yields 30_YEAR -0.12% slipped 2 basis points to 3.39%.
Yields on 5-year notes 5_YEAR +1.79% were little changed at 1.12%.
Last week, yields on all three benchmark securities rose to their highest level since October, rising at the fastest weekly pace in more than seven months. Read about Treasury selloff.
“The selloff, which brought 10-year yields as high as 2.36% intraday, has hit levels attractive enough to bring in dip-buyers,” said bond strategists at CRT Capital Group.
The only U.S. data scheduled are on home-builder sentiment.
Also supporting bonds, the Federal Reserve is scheduled to buy Treasury debt every day this week. See Fed’s buyback schedule.
Operation Twist
The purchases are part of the central bank’s program known as Operation Twist, in which it buys long-term debt and sells shorter-dated holdings. The idea is to hold down interest rates without the central bank further expanding its balance sheet.
While the move up in yields last week pretty much erased the move since Twist began, analysts have also said the objective was to push investors out of the safety of Treasurys and into stocks, corporate debt and other assets considered riskier.
The Fed’s purchases and outlook are one of three reasons RBS Securities strategists think Treasury yields are establishing a new, higher range but not beginning a sustainable move up.
“The Fed still guides policy rates near zero out to 2014, so they don’t appear overly swayed by the recent data — at least yet,” RBS strategists led by Bill O’Donnell said.
Indeed, William Dudley, president of the New York Federal Reserve Bank, said in a speech Monday that “the economy still faces significant headwinds” and inflation is expected to moderate.
Also, technical trendlines have not been broken and investors are not positioned in a way that typically signals a bear move in bonds, O’Donnell wrote in a note.
Ten-year yields will trade between 2.40% and about 2.06%, he said.
