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LONDON, Dec 4 (Reuters) - U.S. Treasury yields rose on Tuesday as stock futures pointed to a higher opening on Wall Street but the fall in bond prices should be limited by concerns over U.S. budget talks, analysts said.
* Ten-year U.S. Treasury yields were up 1.4 basis points at 1.64 percent - in the middle of what one trader called a "micro range" of 1.67-1.60 percent - w i th an eye on higher equity markets . Thirty-year yields also rose 1.6 bps to 2.81 percent.
* The "December lull has probably come even earlier this year. It feels like we are in it already, in terms of volume," said the trader. "(I am) trying to buy dips, but they are so shallow, it's almost impossible."
* As long as politicians cannot agree on how to avert automatic U.S. spending cuts and tax hikes next month, analysts expected the sell-off in Treasuries to be limited. Worries about the "fiscal cliff" intensified on Monday after the White House dismissed a budget deal proposal from Republicans, saying it did not meet President Barack Obama's pledge to raise taxes on the rich.
* "I don't see a major rise in Treasury yields before we solve the fiscal cliff," Philip Marey, strategist at Rabobank said.
* As negotiations become more difficult, Treasury yields could fall, h e said. "We could revisit previous lows like 1.40 (percent) for example in the most extreme case," he said, referring to levels reached by 10-year yields in July. The market is a traditional safe haven because it is so big and liquid.
* Economists fear failure to achieve a deal in time to avert a fiscal crisis could tip the economy back into recession. Against this backdrop, U.S. manufacturing unexpectedly contracted in November to its lowest level in more than three years - a slide that may have been aggravated by superstorm Sandy, which devastated the U.S. east coast in late October.
* A bout of data this week will provide further insight into the health of the world's largest economy culminating in the blockbuster non-farm payrolls numbers on Friday. But market moves may be subdued as the year end approaches, traders said.
* "I just don't have anything at all," a second trader said, when asked how he was positioned in the U.S. Treasury market. "You are at a point in time in the year where fund managers have either made their year or they haven't, traders have either made their year or they haven't."