US treasuries up

US Treasuries rose on Monday as worries over Greece's debt crisis helped reverse a recent sell-off before this week's $118 billion in auctions of government bonds. Traders usually sell bonds to cheapen up the market before Treasury auctions, which start this week with Tuesday's $44 billion sale of two-year notes, but a rout last week went too far, analysts say.
Traders also appeared reluctant to stand in the way of safe-haven buying on the back of uncertainty over whether and how the 16 nations of the euro zone will provide support for Greece. Greece's fiscal tragedy has provided intermittent support for Treasuries this year, all the more so this time around given that bonds had already fallen to attractive pre-auction levels.
"Last week's sell-off has been too much of a concession before the supply. The market got a bit oversold," said Sergey Bondarchuk, US interest rate strategist with BNP Paribas in New York. Two-year notes were up 1/32 in price, yielding 0.99 percent versus Friday's close of 1.0 percent.
The benchmark 10-year note rose 5/32 to yield 3.68 percent versus Friday's close of 3.70 percent. Tuesday's two-year auction will be followed by a $42 billion offering of five-year notes on Wednesday and a $32 billion sale of seven-year notes on Thursday.
The auctions come a week after the Federal Reserve maintained its long-standing promise to keep interest rates at extraordinarily low levels in hopes of helping the economic recovery take firm root. Recent data also showed inflation remained tame, suggesting there were no ill effects yet from the Fed's zero-interest-rate policy.
"With inflation still quite low it looks like the market shouldn't have much problem digesting this week's auctions," said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco. The Federal Reserve Bank of Chicago said on Monday its gauge of the national economy fell in February. Though the release had little impact on the market it fit in with positive tone in Treasuries, which perform well during periods of weak economic activity.
The Federal Reserve's vow to keep benchmark interest rates low for an extended period limits the central bank's policy flexibility, James Bullard, president of the St. Louis Fed, said. Bullard told CNBC television he sees job growth picking up soon as the economy emerges from its worst recession in more than 70 years.