By Luciana Lopez
NEW YORK Jan 28 U.S. Treasuries prices dropped
on Monday after a gauge of planned U.S. business spending rose
in December and investors pushed for price concessions ahead of
a debt auction later in the day.
The Commerce Department said on Monday that non-defense
capital goods orders excluding aircraft, a closely watched proxy
for investment plans, edged higher by 0.2 percent where the
market had expected a small drop.
"Net-net this report actually winds up being modestly better
from a GDP perspective," said Tom Porcelli, chief U.S. economist
at RBC Global Markets in New York.
But he cautioned that milestones later in the week -
including a Federal Reserve policy meeting and key U.S. jobs
data - could keep investors wary.
"You're not going to want to be a hero here on Monday, not
with two major events still ahead of us," Porcelli said.
However, data showing contracts to buy previously owned U.S.
homes unexpectedly fell in December took the edge off losses.
The National Association of Realtors said its Pending Home
Sales Index, based on contracts signed last month, dropped 4.3
percent to 101.7.
The benchmark 10-year note was last trading off
8/32 to yield 1.976 percent. That yield pierced 2 percent
earlier in the session for the first time since last April.
The 30-year bond was last off 12/32 to yield
3.152 percent. Analysts at RBS said the support could lie around
the 3.15 percent level.
The market is also bracing for $99 billion worth of bond
sales by the Treasury this week.
The Treasury will kick off this week's supply with $35
billion in two-year notes on Monday, then sell $35 billion in
five-year notes on Tuesday and $29 billion in seven-year notes
Two-year notes were last trading 1/32 down on the
day to yield 0.284 percent, having fallen below their German
counterparts for the first time in 13 months on
On Wednesday the Federal Reserve caps a two-day policy
meeting. The statement will be scrutinized for signs the central
bank could end its latest bond purchase program this year.
Minutes from the Fed's December meeting, released on Jan. 3,
showed that some voting members of the Fed's policy committee
opposed continuing bond buybacks, sparking speculation that the
central bank may end its latest round of quantitative easing
On Friday, the Labor Department's monthly non-farm payrolls
data could help clarify the state of the U.S. jobs market, which
policymakers have said is a key gauge of the recovery in the
world's biggest economy.
"Policy seems to be on autopilot until the unemployment rate
gets to 6.5 percent," said Chris Rupkey, chief financial
economist at Bank of Tokyo-Mitsubishi UFJ in New York.
Treasuries sold off last week partly on news that European
banks planned to repay more emergency loans than expected,
suggesting the region's banking sector was on the mend and
cooling demand for low risk debt.