US Treasuries prices rose on Monday as a sell-off on Wall Street stocks overshadowed inflation worries about the Federal Reserve possibly buying more bonds and jitters that a wave of corporate bond deals might cut demand for government debt.
More investors sold stocks in the last hour of trading and moved some money back into safe-haven US government debt. They booked profits ahead of a Fed policy meeting later this week and after the Standard & Poor's 500 stock index climbed to its highest level in nearly five years last week.
"It was very up-and-down day for bonds. Stocks were kind of melting down. People are hunkering down, waiting for what the Fed will do," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. Prior to the deepening decline in stocks, Treasuries prices were in the red due to inflation and supply worries. In its prior two rounds of stimulus, the US central bank bought a total of about $2.3 trillion in US Treasuries and mortgage-backed bonds.
In the private debt market, 14 high-grade deals were scheduled on Monday for sale this week. Some analysts estimated this week's investment-grade corporate debt offerings could total $30 billion, according to IFR, a unit of Thomson Reuters. The US Treasury Department will kick off that supply on Tuesday with a $32 billion auction of three-year notes, followed by $21 billion in 10-year supply on Wednesday and $13 billion in 30-year bonds on Thursday.
In the "when-issued" market, traders expect the upcoming three-year note issue due September 2015 to yield 0.335 percent , a hair above the 0.334 percent set a year ago, which was the lowest ever at a three-year note auction. In the open market on below-average trading volume, benchmark 10-year Treasuries notes were up 2/32 in price at 99-22/32, yielding 1.659 percent, down 0.9 basis point on the day. They were down as much as 6/32 with a 1.69 percent yield. Thirty-year bonds, which are most vulnerable if inflation accelerates, were 7/32 higher at 98-25/32 for a yield of 2.810 percent, down 1.2 basis points from late Friday. They were down 28/32 earlier.