Prices fall as U.S. economic data brightens

By Emily Flitter

NEW YORK (BestGrowthStock) – U.S. government debt prices fell on Monday as improvements in the U.S. economy and brightening prospects for Greece’s fiscal situation lessened the appeal of Treasuries, which are considered a safe haven at current yields.

Prices fell overnight in light trading as global stocks rose. Longer-dated Treasuries were down as Greece announced on Monday that it would raise 5 billion euros with a new issue of seven-year bonds, following an agreement last week between European leaders and the International Monetary Fund to provide a backstop for the struggling country.

“Greece’s ability to roll over their debt benefits the global risk asset market complex and conversely does not benefit the Treasury market,” said Russ Certo, managing director and co-head of rates at Broadpoint Capital in New York.

Also contributing to pressure on Treasuries was an increase in consumer spending for February, marking the fifth gain in a row, while the saving rate fell from recent highs.

“Consumers are reliably consuming again,” said Chris Low, chief economist at FTN Financial in New York. “The savings rate is down to 3.1 percent. It was over 4 percent earlier and I think that reflects an improvement in confidence.”

Benchmark 10-year Treasury notes fell 3/32 to yield 3.86 percent, up from 3.85 percent at Friday’s close. The seven-year note dropped 2/32 to yield 3.33 percent, up from 3.31 percent on Friday.

Analysts said the biggest market mover would come at the end of the week, when the government releases nonfarm payroll data for March. But a month-end push by money managers needing to buy more Treasuries to keep their portfolios in line with benchmark indexes could also affect prices this week.

While the amount of Treasury issues rolling off benchmark indexes this month is no higher than normal, analysts were still keeping an eye on the possible influences of the practice, known as index extension.

“We tend to have more volatility around month-end extensions that are relatively benign rather than ones that are more substantial,” said William O’Donnell, the head of Treasury strategy at RBS Securities in Stamford, Connecticut.

The 30-year Treasury bond fell 10/32 in price to yield 4.77 percent, up from 4.75 percent on Friday.

Stock Market Report

(Editing by Chizu Nomiyama)

Prices fall as U.S. economic data brightens