* Bond yields rise after recent multi-month lows
* Close of European markets undercuts U.S. Treasuries bids
* Williams comments limit safe-haven bids
* Traders say lower yields still possible
(Adds analyst comments, updates prices)
By Sam Forgione
NEW YORK, May 19 Longer-dated U.S. Treasuries
yields rose on Monday on profit-taking after hitting multi-month
lows last week, and on reduced bids from European traders
following the close of European markets.
Traders sold 30-year Treasury bonds after their yields hit
3.3 percent last Thursday, which marked their lowest since June.
Benchmark 10-year U.S. Treasuries yields also rose after briefly
falling below 2.5 percent, which some view as a key technical
"The longer end of the market has run a long way," said
Wilmer Stith, fixed income portfolio manager for Wilmington
Trust in Baltimore, Maryland. He said Monday's move up in yields
was a "natural give-back."
Mixed economic data and a generally dovish outlook from the
Federal Reserve have weighed on U.S. bond yields. In addition to
the drop in longer-dated Treasuries yields last Thursday,
benchmark 10-year Treasury yields fell as low as 2.473 percent
that day, or the lowest since late October.
Investors also said the possibility of another cut in
interest rates from the European Central Bank at its next policy
meeting in early June made U.S. Treasuries yields more
attractive to European investors, but that the bid lost some
momentum after European markets closed.
"The fact that in Europe, rates are low and looking like
they're going to go lower ... frankly makes U.S. Treasuries look
very attractive," said Margaret Patel, senior portfolio manager
at Wells Capital Management in Boston.
Investors also said that positive comments on the U.S.
economy from San Francisco Fed President John Williams reduced
some demand for long-dated bonds. Williams said the economy was
growing as a whole and was "booming beyond belief" in the
Seattle and Bay areas.
U.S. 30-year Treasury bond prices were last down
27/32 to yield 3.39 percent, from a yield of 3.35 percent late
Friday. Benchmark 10-year U.S. Treasury notes were
last down 8/32 in price to yield 2.55 percent, from a yield of
2.52 percent late Friday.
Prices on 2-year U.S. Treasury notes, meanwhile,
were up just 1/32 to yield 0.35 percent, from 0.36 percent late
Some traders, however, did not rule out another drop in
yields over the near-term, and cited the possibility of a
downward revision to already-weak first-quarter U.S. gross
domestic product growth as a potential reason for another rally
in bond prices.
U.S. first-quarter GDP growth rose just 0.1 percent in the
first quarter. The U.S. government will publish its second GDP
estimate on May 29. First-quarter GDP growth could be revised
downward to -0.6 percent, some economists say.
Traders also said that gains in U.S. stock indexes also
weighed on Treasuries prices in afternoon trading. The benchmark
S&P 500 ended up 0.38 percent.
(Reporting by Sam Forgione; Editing by Nick Zieminski and Chris