TREASURIES-Yields near 2-mth peak after U.S. consumer data

TOKYO Sun May 19, 2013 9:33pm EDT

Related Topics

TOKYO May 20 (Reuters) - U.S. Treasuries were on the defensive on Monday, with the benchmark yield near a two-month peak after data late last week showed U.S. consumer sentiment rising to its highest level in nearly six years.

* The yield on the 10-year notes stood at 1.954 percent , little changed from late U.S. levels last week but near the high of 1.985 percent hit last week.

* The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment rose to 83.7 from 76.4 in April, far above economists' expectations for 78 and the highest level since July 2007.

* The data eased worries the U.S. economic recovery could slow down on sharp government spending cuts since early this year.

* Treasuries were also undermined by speculation the Federal Reserve may scale down its bond buying programme later this year as the economy continues to recover and U.S. share prices keep hitting new highs.

* Investors are thus closely looking to Fed Chairman Ben Bernanke's testimony on Wednesday, when the central bank will also release the minutes of its last policy meeting, at which it said it could increase or reduce bond buying in the future.

* Some Fed policymakers, including the San Francisco Fed chief who is known as a policy dove, said in the past week the Fed could reduce its bond purchases.

* "It looks like they are intentionally talking about tapering bond buying. Bernanke may discuss the risk of the Fed's policy being too accommodative, to offset the impact of the minutes, where both increase and cut in QE was debated," said a trader at a Japanese bank.

FILED UNDER: