TREASURIES-Bonds slip after three-week gain, stocks weigh

Mon Apr 1, 2013 9:19am EDT

Related Topics

* Stocks set to open near record highs
    * Markets focused on ISM manufacturing index due at 1400 GMT
    * U.S. payrolls report due Friday to be key influence

    By Ellen Freilich
    NEW YORK, April 1 (Reuters) - U.S. Treasuries prices slipped
on Monday after three straight weekly gains, under pressure from
upbeat economic data released late last week when markets were
closed and from recent strength in equities.
    The benchmark S&P 500 stock index and the Dow Jones
Industrial Average ended last week at all-time closing highs and
futures pointed to a flat open on Monday. 
    "There was a brief sell off overnight due to the fact that
the S&P 500 stock index is holding in near its all time high,
signaling further 'risk on,'" said Tom di Galoma, managing
director at Navigate Advisors LLC in Stamford, Connecticut.
    Trading resumed after a holiday-shortened week. U.S.
financial markets were shut for the Good Friday holiday, and the
U.S. bond market had an early market close on Thursday. Trading
on Monday was subdued, with markets in most of Europe shut for
Easter Monday.
    Ten-year Treasuries slipped 11/32 in price, their yields
rising to 1.89 percent from 1.85 percent late on
Thursday.
    U.S. financial markets were focused on the imminent
Institute for Supply Management (ISM) manufacturing index at 10
a.m. EDT (1400 GMT). The index is expected to read 54.2 for
March, unchanged from February.
    Data released on Friday, when U.S. financial markets were
closed, was also somewhat bearish for Treasuries. The reports
showed U.S. consumer spending rose in February and sentiment
among Americans perked up in March, providing further signs of
an acceleration in economic activity in the first quarter.
 
    Treasuries ended the first quarter only slightly weaker
after a bid related to euro zone issues allowed safe-haven U.S.
debt to erase most of the losses incurred in January and
February when investors bet on a strengthening U.S. economy.
    Benchmark 10-year Treasuries yields reached near three-week
lows by the end of last week on fear that losses bondholders and
bank depositors in Cyprus are taking to restructure their banks
would form a template for other euro zone nations struggling
with high debt loads.
    Barclays' total return index on U.S. Treasuries fell 0.13
percent in the first three months of 2013, after a 0.09 percent
decline in the fourth quarter of last year.
    Many still expect yields to gradually edge higher as the
U.S. economy continues to strengthen.
    This week's U.S. monthly payroll number will be closely
scrutinized for signs of further improvement in hiring. The
report is expected to show that 200,000 jobs were added in
March, according to the median estimate of economists polled by
Reuters.
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