US Treasury yields rose on Monday before the US government will sell $64 billion in new debt this week, and ahead of a number of economic releases that will give new insight into the pace of US growth. The Treasury is due to sell $24 billion in three-year notes on Tuesday, $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday, with corporate and other supply also weighing on the market.
A number of data releases, including retail sales for April released on Wednesday, will also be scrutinised for signs of economic strength and whether inflation is picking up, as some believe is likely.
"There is a lot of data event risk coming up because there are so many releases that are of relatively high impact. I can see some selling just as a general point of risk aversion," said Thomas Simons, a money market economist at Jefferies in New York. Import and export price data for April is also due on Wednesday, producer price data for April will be released on Thursday and industrial production for April is scheduled for Friday. Benchmark 10-year notes were last down 25/32 in price to yield 2.24 percent, up from 2.15 percent late on Friday. Thirty-year bonds dropped 1-28/32 in price to yield 3.01 percent, up from 2.90 percent.
Continuing weakness in German government bonds also dragged US Treasury yields higher. German bund yields have spiked in the past week and a half as a rebound in oil prices led some investors to re-evaluate expectations that inflation will stay low. Crowded positioning, with most of the market having bet on continued German bond strength, added to the pace of the sell-off once it began.
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