TREASURIES-U.S. bond yields little changed despite Ukraine tensions

Mon Apr 21, 2014 4:17pm EDT

Related Topics

* Traders anticipate upbeat U.S. data

* Traders discount separatist conflict in Ukraine

* Market awaits $96 bln in Treasury supply (Updates prices, adds new comments)

By Sam Forgione

NEW YORK, April 21 (Reuters) - U.S. Treasuries yields were little changed on Monday after anticipation of another round of strong U.S. economic data limited safe-haven bids, and as traders discounted conflict in Ukraine and emphasized efforts to ease tensions in the country.

While conflict in Ukraine lingered on Monday, traders concentrated on last Thursday's upbeat U.S. economic data showing jobless claims remained low and factory activity was better than expected, and an international agreement struck in Geneva to lower tension in Ukraine.

"We are getting a significant snapback as the weather warms up," said Wilmer Stith, fixed income portfolio manager for Wilmington Trust in Baltimore, Maryland, on the recent positive U.S. economic data.

Traders expected figures this week on U.S. durable goods orders, new and existing home sales, weekly jobless claims and consumer sentiment could come in positive, which would support the view that U.S. economic activity has improved after a brutally cold winter.

Those expectations limited safe-haven bids for U.S. Treasuries. Regarding Ukraine, traders focused on a joint statement from Russia, Ukraine, the European Union and the United States last Thursday to ease tensions in the region.

"Since the Geneva discussions, less brinkmanship has been brought to the picture," said Stith of Wilmington Trust. "It takes away some of the knee-jerk flight-to-quality bid."

Traders focused on those efforts despite continued conflict in Ukraine on Monday, when pro-Moscow separatist gunmen showed no sign of surrendering government buildings they have seized.

Washington says it will hold Moscow responsible and impose new economic sanctions if the separatists do not clear out of government buildings they have occupied across swathes of eastern Ukraine over the past two weeks.

Traders also said that moves were limited after the Good Friday market holiday last week and as financial markets in European and many Latin American countries remained closed for the Easter holiday.

"The market is in sort of a wait-and-see attitude," said Justin Hoogendoorn, fixed income strategist at BMO Capital Markets in Chicago. "Traders are asking whether the U.S. economy will really pick up."

Traders also awaited $96 billion in new coupon-bearing supply this week. The U.S. government will sell $32 billion in two-year notes on Tuesday, $35 billion in five-year notes on Wednesday and $29 billion in seven-year notes on Thursday.

Traders said anticipation of the $96 billion in incoming supply had little effect on Treasuries prices on Monday.

"It's an amount that has shown to be easily digestible by the market," said Stith of Wilmington Trust.

Benchmark 10-year notes were last down 1/32 in price to yield 2.715 percent, from 2.71 percent late Thursday. The yield on the 30-year Treasury bond was last at 3.52 percent, from 3.51 percent late Thursday.

The yield on the 5-year Treasury note was last at 1.72 percent, also roughly unchanged from 1.73 percent last Thursday.

The Federal Reserve bought $3.65 billion of Treasuries maturing between Jan.-Dec. 2019 on Monday as part of its ongoing asset purchases, which had little impact on Treasuries prices.

On Wall Street, all three major stock indexes advanced modestly as investors awaited key earnings releases. (Reporting by Sam Forgione; Editing by Meredith Mazzilli and Chizu Nomiyama)

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