* Absence of short-covering caps price gains
* Decline in U.S. stocks supports safe-haven bids
* Investors focus on ECB meeting, Ukraine
By Sam Forgione
NEW YORK, May 20 (Reuters) - U.S. Treasuries traded mostly flat on Tuesday as recent short-covering stalled, though declines in Wall Street stocks drove some safe-haven support and capped losses.
Analysts said traders’ moves to cover bets against Treasuries in response to falling interest rates had largely been exhausted. The short-covering was partly responsible for benchmark 10-year Treasury yields hitting multi-month lows last week.
“There is probably no more short-covering needed,” said Jeffrey Young, U.S. interest rate strategist at Nomura Securities International in New York. He added that traders were reluctant to take bullish bets on Treasuries.
“Shorts have been burned a lot, and you don’t spend the last week and a half covering just to get back in,” he said.
Traders also said that an absence of U.S. economic data kept prices flat, along with a wait-and-see period ahead of key events, including the European Central Bank’s next policy meeting in early June and upcoming elections in Ukraine.
Prices on 30-year Treasuries bonds were flat, with yields at 3.385 percent. Benchmark 10-year U.S. Treasury notes prices were last up 1/32 to yield 2.532 percent, from a yield of 2.536 percent late Monday.
Longer-dated Treasuries bonds pared early losses after a decline in U.S. stocks drove some safe-haven bids.
“There’s a little bit of risk-off sentiment given the declines in stocks,” said Kim Rupert, managing director for fixed income at Action Economics in San Francisco.
She noted that geopolitical risks surrounding Ukraine remained an “undercurrent” that drove some safe-haven support for Treasuries.
On Wall Street, the S&P 500 and Dow Jones industrial average traded down 0.15 percent, as investors assessed some of the final corporate results of earnings season.
Reporting by Sam Forgione; Editing by Dan Grebler