(Adds fresh comment, updates prices)
* U.S. homebuilder sentiment at seven-month high weighs on
* Ukraine, Middle East tensions ease
By Gertrude Chavez-Dreyfuss
NEW YORK, Aug 18 U.S. Treasury debt prices fell
on Monday after three days of gains as risk appetite returned
following upbeat U.S. housing data and easing tensions in the
Middle East and Ukraine.
Market participants said the sell-off was a much-needed
pullback after a remarkable rally in the Treasury market this
year, which saw U.S. 10-year note yields start 2014 at just over
3.00 percent and end at 2.38 percent on Monday.
"We've really had quite a bullish run in Treasuries," said
Dan Heckman, senior fixed income strategist at U.S. Bank Wealth
Management in Kansas City. "I'm not surprised that people are
taking profits. You'll probably have a bit more profit-taking
A geopolitical situation that has not markedly deteriorated
certainly fueled selling in Treasuries, Heckman added.
Foreign ministers from Russia, Ukraine, Germany, and France
were in Berlin on Sunday to discuss talks for a ceasefire or a
political solution, although there has yet to be a
break-through. Russia has said it would like a ceasefire to
allow aid to get to people trapped by the fighting.
Last Friday, investors bought U.S. Treasuries in a
safe-haven bid after the government in Kiev said its artillery
had partially destroyed a Russian armored column. Russia, on the
other hand, denied its forces had crossed into Ukraine.
Investors on Monday breathed a sigh of relief that things
did not escalate further in that region, even as tensions in
Gaza have eased a little bit amid talks in Egypt about ending
the conflict in the Middle East.
In addition to the global political situation, a strong U.S.
housing report pushed U.S. 10-year note and 30-year bond prices
to session lows. The data showed that homebuilder sentiment rose
in August to its highest since January, according to the
National Association of Home Builders.
The NAHB/Wells Fargo Housing Market index rose to 55 in
August from 53 in July, the group said in a statement. It was
the third straight monthly gain, and topped the mean estimate of
analysts polled by Reuters for a reading of 53.
"As the only data point for the day, it's notable at least
insofar as it's directionally consistent with the downward
pressure in Treasuries," said Ian Lyngen, senior government bond
analyst at CRT Capital in Stamford, Connecticut.
In late trading, U.S. 10-year notes fell 12/32
in price to yield 2.387 percent from 2.339 percent late on
Friday. U.S. 30-year bond prices also slid, dropping
more than a point to yield 3.195 percent from 3.129 percent the
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chris Reese
and James Dalgleish)