TREASURIES-U.S. 10-year yield off 3-week high, focus on auctions

SINGAPORE Mon May 6, 2013 11:23pm EDT

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SINGAPORE May 7 (Reuters) - The U.S. 10-year Treasury yield slipped on Tuesday, edging away from a three-week high set the previous day, when bonds extended their losses in the wake of last week's better-than-expected jobs data.

* The near-term focus is on this week's bond auctions. The Treasury will sell $32 billion in three-year notes on Tuesday, $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday.

* Ten-year notes rose 4/32 in price to yield roughly 1.750 percent. The 10-year yield eased 1 basis point from late U.S. trade and inched away from a three-week high of 1.776 percent set on Monday.

* The better-than-expected jobs data on Friday had caught traders off guard, as most were anticipating a gloomier jobs picture after other economic data pointed toward more sluggish growth.

* Many analysts, however, believe that economic growth is still too slow and investors have pared back expectations that the Federal Reserve may taper or end bond purchases this year as inflation also slows.

A Reuters survey of economists, taken after Friday's jobs data, showed that 11 U.S. primary dealers - financial institutions that deal directly with the Fed - expect the U.S. central bank to continue asset purchases into 2014, while just four saw the programme ending this year.

* The 10-year Treasury yield might decline after this week's bond auctions are out of the way, said Shinichiro Kadota, a strategist for Barclays in Tokyo.

Kadota said the U.S. economy seems likely to slow down in the April-June quarter due to factors such as the impact from the government spending cuts known as the sequester.

"Once the market gets past the auctions, bonds yields might head lower again, since the chances seem high that data will point to a worsening of economic conditions," Kadota said.

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