US Treasury prices down

US Treasury prices fell on Monday as investors suspected record US home sales might herald a wave of strong data in a week packed with economic reports. Policy-makers have argued that a June slowdown in US economic growth was a blip in an otherwise healthy recovery.
Bond bulls are worried this theory could be corroborated in this week's data, damaging safe-haven government debt.
Compounding the uneasy mood was a hefty pile of upcoming supply - $35 billion worth will make its way into the market this week.
The week's first notable economic report certainly caught bond bulls off guard. Sales of existing homes climbed 2.1 percent to a 6.95 million annual rate in June, confounding analysts who had looked for a pullback.
"How much of this is just people rushing out to lock in rates before they go up remains to be seen," said Steve Ricchiuto, chief US economist at ABN Amro.
Dealers were on the defensive, with the benchmark 10-year note sliding 15/32 for a yield of 4.49 percent, up from 4.43 percent on Friday but still well within this month's tight trading range.
Traders also reported an unwinding of safe-haven bids, though perhaps not as much as usual as the Democratic National Convention is on this week and authorities have warned of possible terror attacks.
Bonds found some support in a sagging stock market, with the Nasdaq languishing at nine-month lows. Such weakness could dampen consumer and business confidence and make fixed-income debt more attractive in comparison.
Despite that possibility, the five-year note was down 9/32, nudging yields up to 3.74 percent from 3.67 percent. At the long end, 30-year bonds lost 21/32, leaving yields at 5.21 percent.
Two-year yields edged up to 2.71 percent from 2.65 percent late on Friday, extending the recent sharp flattening of the yield curve.
The gap between two- and 10-year yields has contracted by almost 20 basis points this month to stand at 178 basis points. If it ends the day there, it will be the lowest close since April 2002.
The Treasury will auction $24 billion in two-year notes on Wednesday, down from the $25 billion in June and its smallest two-year tender since December 2001. The Treasury will also sell $11 billion in 20-year inflation-protected notes on Tuesday.