LONDON Feb 4 U.S. Treasury yields hit their
highest levels in over nine months on Monday and traders said
borrowing costs had further room to rise as markets readjust to
a more healthy economic outlook after recent data.
* Ten-year U.S. Treasury yields hit their
highest since April last year at 2.059 percent, up 3.4 basis
points on the day.
* Debt prices continued to be under pressure after data on
Friday pointed to steady economic growth, showing job growth and
* Investors will look at orders for factory goods due on
Monday and at data on the vast U.S. services sector on Tuesday
for further signs that the world's largest economy is on the
* "From here, the question becomes how much further down do
we go? I think (yields) could conceivably move to 2.20 (percent)
on 10-year notes," the trader said. "This is just a repricing of
the safe-haven bid."
* "At the moment, I think we will continue to see lower bond
prices," he added.
* Five-year U.S. Treasury yields rose 2.7 basis
points to 0.92 percent, while 30-year borrowing costs
were up 2 bps at 3.25 percent.
* Philip Marey, strategist at Rabobank, expected 10-year
yields to be stuck in a 1.90 to 2.10 percent range as a looming
fiscal problem limits the scope for a sell-off.
* Obama and lawmakers were able to avoid a year end "fiscal
cliff" of deep automatic spending cuts known as the sequester
and tax increases at the end of 2012. Republicans agreed to
extend temporarily the U.S. capacity to borrow without demanding
spending cuts in return.
* However the two sides still face the prospect of painful
across-the-board spending cuts in a month if they do nothing - a
prospect Marey said could continue to give safe-haven Treasuries
* "There are still some budget battles to be fought," Marey
said. "That will keep markets on edge and will keep business
investment somewhat muted."
(Reporting by Ana Nicolaci da Costa/editing by Chris Pizzey,
London MPG Desk, +44 (0)207 542-4441)