LONDON Jan 17 U.S. bond yields rose on Thursday
as investors positioned for further improvements in housing and
jobs data later in the day and strong results at a Spanish debt
auction hit appetite for triple-A rated government debt.
Weekly jobless claims are expected to drop slightly, while
housing starts are seen edging higher, extending a recent series
of data that have painted a more upbeat outlook for the United
States and have weighed on safe-haven treasuries.
On Wednesday, the Federal Reserve's latest Beige Book showed
mild U.S. growth in recent weeks but offered no signal that
economic expansion will accelerate.
In the euro zone, debt-laden Spain met the upper end of its
target range at a bond auction that saw lower borrowing costs,
causing losses for assets generally perceived as low risk.
U.S. benchmark 10-year T-note yields were 2.5
basis points higher at 1.8431 percent, while T-note futures
were 9/64 lower at 135-05/32.
"I feel the market is expecting good numbers on the data
today and we've had clear signs the U.S. economy is picking up,"
said Alan McQuaid, chief economist at Merrion Stockbrokers.
"It's obviously slow, but moving in the right direction."
Stopping yields going higher was the debate about raising
the $16.4 trillion debt ceiling in the United States, McQuaid
The U.S. Treasury said on Tuesday it was temporarily tapping
the retirement funds of government workers to avoid hitting the
debt ceiling. It has said it can stave off default through such
extraordinary measures until around mid-February to early March.
Data from Markit showed the cost to insure against a U.S.
default was rising. Five-year credit default swaps rose 2 basis
points to 45 basis points on Thursday, having traded just above
30 bps at the start of the year.
That meant it cost 45,000 euros annually to buy 10 million
euros of protection against a U.S. default using a five-year CDS
Markit analyst Gavan Nolan said there were very few trades
in shorter-dated CDS in Europe.