LONDON Jan 9 U.S. government bonds fell in
Europe on Wednesday as investors made room in their books for
upcoming supply of a combined $34 billion of 10- and 30-year
* The Treasury will sell $21 billion in 10-year notes on
Wednesday and $13 billion in 30-year bonds on Thursday. A German
auction of five-year bonds was also contributing to broad
pressure on safe-haven debt.
* A sale of $32 billion of three-year notes on Tuesday saw
strong non-dealer bidding. The high yield was 0.385 percent, in
line with expectations.
* Benchmark 10-year T-note yields were 1.9 basis
points higher on the day at 1.8833 percent, while 30-year yields
rose 2.1 bps to 3.0863 percent.
* "With supply coming on the horizon in both Treasuries and
Germany, it seems like the market is cheapening up here," said
Craig Collins, a trader at Bank of Montreal, adding the next
move in yields depends on how supply is absorbed.
* "The 10-year note is in an OK shape ... but the long bond
tomorrow is more of a wild card, a little tougher to digest in
this environment. If it goes poorly tomorrow I think 2 percent
(in 10-year) yields becomes a legitimate target," Collins said
* T-note yields hit 8-month highs of 1.9750 percent last
week on the back of a last-minute deal to avert a fiscal crisis
in the U.S. and some better-than-expected economic data out of
the world's top economy. The U.S. market stabilised this week as
some investors snapped up the cheapened paper.