U.S. bonds fall slightly ahead of auctions

By Emily Flitter

NEW YORK (BestGrowthStock) – U.S. Treasury debt prices fell slightly on Monday ahead of new supply, although losses were limited as worries persisted over the soundness of some European countries’ debt.

Prices slipped as investors prepared for a series of auctions of three-year, 10-year and 30-year government securities worth a total of $81 billion.

Meanwhile, Greece’s fiscal woes remained a focus for market participants. Over the weekend, officials from the European members of the Group of Seven industrialized nations vowed to hold Greece to its cost-cutting program. But investors were waiting for European leaders to take further steps to address the continent’s debt crisis.

“People are waiting for a coordinated governmental response, both to Greece and the other countries that may find themselves in the same situation,” said Jim Vogel, head of fixed income research at FTN Financial Capital Markets in Memphis, Tennessee. Spain and Portugal are two of the countries under close scrutiny for their shaky fiscal situations.

“Part of the sense of what we’re dealing with is no one was ready for these issues to come up this quickly,” Vogel said.

Traders were also watching U.S. stocks (Read more about the stock market today. ) for cues as to whether the flight to quality that took hold of global markets last week would continue on Monday. The major U.S. indexes were mostly flat, however. Treasury prices generally move inversely to stocks.

The benchmark 10-year Treasury note was down 4/32 to yield 3.60 percent. The 30-year Treasury bond was down 2/32 for a yield of 4.53 percent.

“(The market is) waiting to see if there’s any return to this flight from risk, flight to quality,” said Rick Klingman, managing director of Treasury trading at BNP Paribas in New York.

The market also took in remarks by James Bullard, the president of the Federal Reserve Bank of St. Louis. He told Reuters in an interview that the Federal Reserve could begin selling off some of the assets it is holding later this year. Prices were little changed, however, following Bullard’s comments.

In the first of three auctions this week, the Treasury Deparment will sell $40 billion in three-year notes on Tuesday. Three-year notes traded slightly lower ahead of the auction.

FTN’s Vogel said that despite Treasuries’ price gains last week, three-year notes were set up well for Tuesday’s auction. “There’s still some value there for people that are trying to avoid risk,” he said.

Three-year notes were off 2/32 in price to yield 1.29 percent.

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(Editing by Chizu Nomiyama))

U.S. bonds fall slightly ahead of auctions