Treasuries lower

US Treasuries prices fell on Thursday, renewing their recent losing streak, as investors saw a further opportunity to close out long positions after reports Ireland was near an aid deal for its troubled banks. Some analysts also speculated that benchmark 10-year notes may be on route to breaching new technical support levels, which could send yields above 3 percent, as bond sellers continued to overpower buying by the Federal Reserve's new $600 billion quantitative easing program, known as "QE2."
"Treasuries are for sale around the world, the only buyer right now is the Fed," said Robert Zukowski, senior analyst at 4Cast Ltd in New York. "Everybody else is trying to sell it." The Fed has been purchasing billions of dollars' worth of bonds almost every day under QE2. The US central bank on Thursday purchased $7.23 billion in government debt due June 2013 to October 2014. Renewed selling in bonds was triggered, nonetheless, on reports that debt-stricken Ireland is closer to receiving tens of billions of euros from European partners and the IMF to provide contingency capital for its shattered banks.
This sparked greater risk-taking that sent US and European stocks and commodities higher, and dampened demand for safe-haven assets. "There's more appetite for risk on the equity side, and at the same time on the bond side there is less fear of more bad news," said Jim Vogel, interest rate strategist at FTN Financial in Memphis, Tennessee.
Reduced appetite for Treasuries is ominous for next week's supply. The Treasury Department said on Thursday it plans to sell a combined $99 billion in two-, five- and seven-year notes next week, matching the total it sold in October.
Earlier, Treasuries hit session lows after data from the Philadelphia Federal Reserve showed faster-than-expected business growth in the US Mid-Atlantic region in November. Mixed data in recent days has shown the economy is growing but risks of deflation remain. Unemployment also remains high, boosting the argument that further stimulus is needed.
Benchmark US 10-year Treasury notes declined 7/32 in price to yield 2.91 percent, up from 2.88 percent late on Wednesday, while the 30-year bond ended up 4/32 to yield 4.28 percent against 4.29 Wednesday. Two-year notes dropped 1/32, their yields rising to 0.51 percent from 0.49 percent on Wednesday, while five-year debt fell 4/32 for a 1.50 percent yield, up 3 basis points from late Wednesday. Treasuries have generally held in a range after seeing a rapid sell-off last week and on Monday, which saw 10-year notes test new support levels around 2.97 percent.