TREASURIES-US debt prices fall as Europe data brightens

* UK GDP shows largest jump in four years

* German business sentiment reaches three-year high

* Next week’s supply of $104 billion in debt weighs
(Adds context, quotes, updates prices)

By Emily Flitter

NEW YORK, July 23 (BestGrowthStock) – U.S. Treasury prices fell on
Friday, following German and UK government bond prices lower,
after surprisingly strong economic data from Europe lifted
global stocks.

Gross domestic product in Britain grew by the largest
amount in four years, while a measure of business sentiment in
Germany hit a three-year high. The news lured investors out of
safe-haven government bonds and into equities and other,
riskier assets.

“The idea that Europe’s going to lead us into a recession
is being questioned,” said Rick Klingman, managing director of
Treasury trading at BNP Paribas in New York.

The benchmark 10-year note (US10YT=RR: ) lost 16/32 in price
to yield 2.99 percent, up from 2.94 percent late on Thursday.

With no economic data on the U.S. calendar on Friday,
traders were anticipating the release of the results of a round
of stress tests performed on European banks to be the main
driver of price action. European Union officials will release
the results at 12 p.m. (1600 GMT).

Klingman said it wasn’t clear whether the test results
would have an immediate affect on Treasury prices.

“I don’t know if it’s going to be an instantaneous thing,”
he said. “The findings will come out, and then people will
crunch the numbers over the weekend.”

Rising stocks also kept pressure on Treasury prices. The
Treasury market has shown a strong correlation to the stock
market for most of the spring and summer.

“The resilience of the equity market, the earnings that
have come out, that’s pretty impressive on the equities side
that’s probably going to allow for a risk-on trade,” said John
Spinello, Treasury bond strategist at Jefferies & Co in New
York.

Treasury traders are facing $104 billion in new coupon
supply next week. The Treasury Department holds three days of
auctions of two-year, five-year and seven-year notes.

Spinello said Friday’s sell-off was a chance to set up for
the coming supply.

“This will allow us to buy the notes we’re going to be
bidding on next week a little cheaper,” he said.

The 30-year bond (US30YT=RR: ) lost a full point early in the
trading day and was last trading 25/32 lower with its yield
rising to 3.99 percent, up from 3.95 percent on Thursday.

Two-year Treasury notes (US2YT=RR: ) lost 1/32 in price on
Friday to yield 0.58 percent. The five-year note yield
(US5YT=RR: ) on Friday rose to 1.71 percent from 1.68 percent at
Thursday’s close.

Stock Trading

(Editing by Padraic Cassidy)

TREASURIES-US debt prices fall as Europe data brightens