LONDON Jan 25 U.S. Treasury yields rose on
Friday after better-than-expected euro zone data added momentum
to a safe-haven bond selloff, although the top of the recent
technical trading range was seen as likely to cap the rise.
Low-risk bonds in the United States and Europe weakened
after a German business sentiment survey improved for the third
consecutive month. The survey added to a more positive picture
painted by U.S. employment data on Thursday.
The selling pushed U.S. 10-year yields 3 bps
higher to 1.88 percent, towards the top end of the 1.8 to 1.9
percent range which has held since early January.
"The market is cheapening up here but overall we're still in
this very tight band and technicals continue to hold the market.
If the market does drift off I'd expect the 1.90 area to bring
enough buyers back in," a trader said.
Treasury futures fell 21/64 to 131-29/32.
Over the longer-term, U.S. bonds remain supported by an
uncertain fiscal outlook, with a mixed outlook for the economy
and worries about crashing into the country's self-imposed debt
limit postponed rather than resolved.
"Despite the modest improvement in risk appetite we've seen
this year, the Treasury market is remarkably resilient and I
think that's a reflection of expectations that the economy is
going to slow in the first quarter," said RIA Capital Markets
strategist Nick Stamenkovic.
Stamenkovic highlighted next week's non-farm payrolls data
as an important gauge of economic progress, with a strong figure
of 180,000 or above enough to bolster confidence in the business
sector and see Treasury yields re-test the 1.90 barrier.