TREASURIES-U.S. bonds little changed, supply could weigh

LONDON, April 9 Tue Apr 9, 2013 5:04am EDT

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LONDON, April 9 (Reuters) - U.S. Treasuries were little changed at high levels on Tuesday but could face some near-term selling pressure as the market absorbs a bout of supply this week.

The U.S. Treasury Department will sell $32 billion in three-year debt on Tuesday, $21 billion in 10-year notes on Wednesday and $13 billion in 30-year bonds on Thursday.

Any dips are likely to attract more buyers, traders said, with the market recently supported by the prospect of interest from Japanese investors after the Bank of Japan announced aggressive monetary easing steps last week.

Ten-year U.S. Treasury yields were broadly steady at 1.75 percent. It hit its lowest since December at 1.68 percent on Friday, after U.S. jobs numbers were weaker-than-expected.

The BOJ on Thursday announced extraordinary stimulus steps to revive the world's third-largest economy, taking Japanese yields to record and fueling expectations that investors will seek returns elsewhere.

That view has benefited both the U.S. Treasury and euro zone debt markets in recent days, limiting the downside for bond prices.

Five-year U.S. Treasury yields were flat at 0.71 percent while the 30-year equivalent was 1.5 basis points higher at 2.93 percent.

Later this week, investors will also study minutes from the Federal Reserve's latest meeting for any signs officials are pondering the exit of ultra-loose monetary policy.

Any such considerations will have been overshadowed by a much weaker-than-expected non-farm payrolls report last week, and market players will look at retail sales this Friday for the latest gauge of health of the world's largest economy.

"(The focus is on) minutes which give us some insight into the timing of any potential tapering of QE (quantitative easing) and the retails sales figures which show whether the resilience of consumers has persisted in March or not," Nick Stamenkovic, bond strategist at RIA Capital Markets said.

"Until then, I think Treasuries are pretty much range-bound and will be dictated by what happens in risk markets."

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