Treasuries edge up, supported by buying on dips

LONDON (BestGrowthStock) – U.S. Treasury debt prices edged up in European trading on Monday, supported by some buying on dips after the market sold off late on Friday.

The market is expected to remain bullish, with housing data due later in the week adding to evidence of a faltering economic recovery which has seen investors scramble for safe-haven government debt.

“People are going to continue to have the strategy of buying on dips so the market doesn’t trade off too much. The market is in OK shape,” a trader in London said.

On Friday, the 10-year Treasury yield hit a 17-month low near 2.53 percent and the two-year yield touched a record trough of around 0.460 percent. But a late sell-off on Friday lifted Treasury yields off those lows.

Traders said while data this week was likely to keep yields under pressure, $109 billion euros in supply could offset the bullish trend.

“The market is looking for a continuation of softening in the housing situation and that’s bond friendly but there’s a lot of supply on the horizon so that could offset that,” another trader said.

Benchmark 10-year T-notes were up 4/32 in price to yield 2.604 percent by 1020 GMT, 1 basis point down from late New York trade while the 30-year T-bond jumped 15/32 in price to yield 3.638 percent.

The 10/30-year Treasury yield gap crunched in to 103 bps, its narrowest in 13 months.

With the debt auctions concentrated at the shorter end of the curve, the long bond is expected to keep outperforming, further flattening the yield curve.

The two-year T-note was up 1/32 in price to yield 2.047 percent, about 1 bp softer on the day.

(Reporting by Emelia Sithole-Matarise; Editing by John Stonestreet)

Treasuries edge up, supported by buying on dips