TREASURIES-Weak auction, Spain speculation weigh on U.S. bonds
LONDON, Sept 21
LONDON, Sept 21 (Reuters) - U.S. government bonds fell in Europe on Friday, feeling the pressure of a weak inflation-protected debt auction and as speculation Spain may soon request a bailout diverted attention to riskier assets.
* A sale of $13 billion of 10-year Treasury inflation-protected securities drew the lowest bid-to-cover ratio since April 2009.
* Benchmark 10-year T-note yields were 2.5 basis points higher on the day at 1.789 percent. T-note futures were 2/32 lower at 132-10/32.
* "There's a hangover from the bad auction and I think the long end will struggle a bit from here ... I would have (said)there will be buyers at 1.80-1.85 on the 10-year but we're there now and they're not."
* In Europe, sources with knowledge of the matter told Reuters that Spain was considering freezing pensions and speeding up a planned rise in the retirement age as it tries to meet conditions of an expected bailout package.
* A Spanish request for a bailout would activate the European Central Bank's new bond-buying programme and potentially ease worries about the euro zone debt crisis.
* "It looks like Spain is getting closer to an agreement with the EU regarding a bailout ... markets are more confident it will make such a move and that's helped risk markets and taken the shine off Treasuries," said Nick Stamenkovic, a bond strategist at RIA Capital Markets.
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