US Treasuries yields rose on Tuesday, closing a rough quarter, as hopes of a last-minute deal between Greece and its creditors that would keep the cash-strapped nation from leaving the euro zone pared the safe-haven demand for US government debt. The Treasuries market was on track to post about a 1.5 percent loss in the second quarter, which would be its worst quarter since the final three months of 2010, according to an index compiled by Barclays.
In choppy trading, US benchmark yields bounced up from one-week lows set during Monday's rally due to a weekend breakdown in talks between Athens and international lenders ahead of Tuesday's deadline for Greece to repay the International Monetary Fund $1.77 billion. The contentious, unpredictable negotiations have resulted in
investors piling in and out of Treasuries and other low-risk assets in recent days, analysts said. "It's all about Greece. The Treasuries market seems to be trading on each Greece headline," said Thomas Roth, executive director of US government trading at Mitsubishi UFJ Securities USA in New York. On Tuesday, European Commission President Jean-Claude Juncker made an offer to convince Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro.
These latest developments were mitigated by weaker-than-expected US domestic economic data, including a weaker-than-expected rise in home prices in April, according to S&P/Case-Shiller, and a smaller-than-expected increase in a private measure on business activity in the Chicago area. Month-end related buying and news of German Chancellor Angela Merkel ruling out new debt talks until after Sunday's referendum briefly sent the Treasuries market into positive territory until demand faded in late trading.
Bond selling re-emerged after Federal Reserve Vice Chairman Stanley Fischer said the US economy is approaching full employment, supporting the view the central bank would raise interest rates later this year. Benchmark 10-year Treasuries notes were down 5/32 in price for a yield of 2.351 percent, up 2 basis points from Monday. The 10-year yield was up 42 basis points in the quarter, the steepest quarterly rise in two years. The 30-year bond was down 16/32 in price for a yield of 3.125 percent, up nearly 3 basis points. The 30-year yield was up 58 basis points in the quarter, the largest quarterly yield rise since the fourth quarter of 2010.
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