US Treasuries fell on Thursday as gains in stocks and the euro dented safe haven appetite, but looming worries over a Sunday election in Greece could see prices back up before the weekend. A $13 billion auction of US Treasury 30-year bonds, the last leg of this week's $66 billion in coupon-bearing supply, drew mixed results.
The reopening of a 30-year bond first sold in May fetched a yield of 2.720 percent, a record low at a 30-year auction.
Overall bidding was the weakest since November 2011, although large investment funds and other direct bidders bought 24 percent of the 30-year supply, their biggest share since October 2011. With this week's Treasuries auctions behind them, investors and traders turned their focus to the Greek election and next week's G20 summit in Mexico, as well as the Federal Reserve's policy meeting on Tuesday and Wednesday, analysts said.
"Not only did Treasury prices get too rich for some", said Kim Rupert, managing director of global fixed income analysis at Action Economics, "but the possibility of a pro-bailout win at the polls in Greece on Sunday could be negative for bonds."
Treasuries added slightly to losses after news late in the session that central banks from major economies stand ready to take add liquidity to global markets should the Greek election cause tumultuous trading. But Rupert said the effects were overshadowed by the upcoming Greek vote and by a Federal Reserve meeting next week, both of which could nudge Treasury prices higher soon.
While the Dow Jones industrial average closed up 1.24 percent, benchmark 10-year Treasuries last traded down 10/32 in price, yielding 1.633 percent.
"No matter who wins, there will be no clear outcome for Greece after the election," Lou Brien, market strategist at DRW Trading in Chicago.
Thirty-year bonds briefly traded in positive territory as traders positioned for the Fed's latest purchase for its $400 billion "Operation Twist," analysts said. The US central bank ended up buying $2.04 billion in debt maturing in February 2036 to February 2042.
Some analysts predict the Federal Open Market Committee might extend Operation Twist next Wednesday in a bid to help the US economy, which has showed signs of slowing. Operation Twist is set to end at the end of June.
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