US Treasury prices fall

US Treasury debt prices fell on Monday ahead of a two-day monetary policy meeting and as stock market gains during most of the trading session dampened the safe-haven bid for lower-risk assets like government debt. Investors are looking ahead to the results of the Feds two-day policy meeting, which begins on Tuesday and will end Wednesday with a statement from the Federal Open Market Committee.
Since the Feds views on the economy have been well advertised, analysts said Treasury market participants will look in particular at how the statement addresses the possibility that the Fed would buy long-dated US Treasuries to push interest rates lower in other markets. For much of the day, major stock indexes were in the plus column, weighing on Treasuries prices, before stocks met some technical resistance after last weeks gains and shed their gains before the closing bell.
"Treasuries prices weakened, but never challenged any ranges, and the curve steepened a bit as the front end remains anchored to the Feds zero interest-rate policy," said David Ader, US government bond strategist at RBS Greenwich Capital in Greenwich, Connecticut.
Fed Chairman Ben Bernankes assertion in an interview on the "60 Minutes" news show on Sunday that the US recession would end "probably this year" and that "Well see recovery beginning next year" helped to support stocks for much of the session and also weighed on Treasuries, analysts said. The Treasury Department said net overall capital outflows from the United States, including short-term securities such as Treasury bills, totalled a record $148.9 billion in January.
"The TIC data were onerous - less buying - but the market was off well before that," Ader said. In late trade, the benchmark 10-year Treasury note was down 16/32 in price, its yield rising to 2.96 percent from 2.90 percent late on Friday. The 30-year bond fell 1-17/32, its yield rising to 3.77 percent, up from 3.68 percent on Friday. Thirty-year yields pushed to as high as 3.83 percent on Monday, the highest since late November.
Bonds pared early losses after the New York Federal Reserve said manufacturing production fell to a record low in March, with both new orders and investments falling. Five-year Treasury notes fell 7/32 in price, their yields rising to 1.92 percent from 1.87 percent late on Friday, while two-year notes slipped 2/32, their yields steady at 1 percent.