BLBG:Treasuries Fall Before Existing Home Sales, Note Auctions
Treasuries dropped for a third day before a report that economists said will show sales of existing homes in the U.S. rose in April, weakening the case for the Federal Reserve to add to add stimulus measures.
Longer-dated bonds led declines after Fed Bank of Atlanta President Dennis Lockhart said economic conditions don’t warrant another round of bond purchases by the central bank. European leaders will hold a summit tomorrow to address the region’s fiscal crisis, damping demand for the safest securities. The Treasury plans to auction $99 billion of notes this week starting today.
“There doesn’t look to be any prospect of any fresh Fed measures to support the Treasury market,” said Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London. “The market will have a tendency, especially in a risk-on scenario, of seeing the yield curve steepen,” he said, meaning longer-term yields will increase relative to shorter maturities.
The 30-year yield rose six basis points, or 0.06 percentage point, to 2.87 percent at 1:01 a.m. London time, according to Bloomberg Bond Trader prices. The 3 percent note due in May 2042 declined 1 10/32, or $13.13 per $1,000 face amount, to 102 17/32.
The 10-year rate climbed four basis points to 1.78 percent, widening the difference in yield with 30-year rates for the first time in nine days. The spread increased three basis points to 1.1 percentage points.
Sales of existing U.S. homes advanced 2.9 percent in April from March, gaining for the first time in three months, based on a Bloomberg News survey of economists before the National Association of Realtors report today.
The difference in yields between 10-year notes and Treasury Inflation Protected Securities, which represents expectations for the rate of inflation over the life of the securities, increased for a third day. It climbed to as much as 2.21 percentage points today, the most since May 8.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
