US Treasuries yields jumped in a market rout on Tuesday as hopes Greece could strike a new debt deal and a further recovery in oil prices took the safe-haven shine off of high-rated government bonds. Benchmark yields were up 11 basis points in late trading, putting them on track for their biggest one-day rise in more than 14 months, Reuters data showed.
"A lot of factors were jacking up the back end of the yield curve," said Richard Gilhooly, interest rate strategist at TD Securities in New York. These factors resulted in a rare bad day for Treasuries so far in 2015 after the sector scored its best month in over six years in January. The bond sell-off began after Japan's Ministry of Finance sold 2.4 trillion yen 10-year JGBs to unexpectedly weak demand and news Greece's that new government dropped calls for a write-off of its foreign debt.
The bond market downdraft intensified as US oil futures stretched their winning streak into their biggest four-day advance since January 2009. Last week, crude prices fell below $44 a barrel to near six-year lows on worries about oversupply and weak global demand. Competition from an estimated $25 billion in corporate bond supply this week also reduced appetite for lower-yielding US government debt, analysts said. The sell-off paused after the Reserve Bank of Australia unexpectedly lowered its policy rate by a quarter point to a record low 2.25 percent, which supported the view it has become tougher for the Federal Reserve to consider raising interest rates in 2015.
Benchmark 10-year Treasuries yields rose to 1.781 percent, up nearly 11 basis points from Monday. The 10-year yield was on track for its largest one-day rise since November 2013. Thirty-year bond yields climbed to 2.370 percent, up more than 11 basis points on the day. The 30-year yield was on track for its biggest single-day jump since July 2013. Despite Tuesday's spike, Treasuries yields were not far from their recent lows on fears of deflation spreading globally.
On Friday, the 10-year yield fell to 1.637 percent, the lowest since May 2013, and the 30-year yield hit a record low of 2.221 percent. As investors reduced their bonds holdings, they moved some money back into stocks. The Standard & Poor's 500 index was up 1.4 percent in late trading.
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