TREASURIES-U.S. bond prices edge up on Greek debt talk jitters

* Uncertainty over Greek debt talks feeds bids for bonds

* Upcoming $90 bln in fixed-rate supply caps market gains

* Fed’s Fischer says rate hike “widely expected” in 2015, path uncertain

* U.S. yields rose briefly with Bunds on Draghi’s comments (Adds details, updates market action)

By Richard Leong

NEW YORK, March 23 (Reuters) – U.S. Treasuries prices rose on Monday amid investor anxiety over negotiations between Greece and its creditors over the terms of a 240-billion-euro bailout for the cash-strapped nation.

This week’s $90 billion worth of fixed-rate issues in two-year, five-year and seven-year securities, in addition to $13 billion in two-year floating-rate supply, limited the market’s gains.

The bond market was also digesting last week’s rally with the two-year yield posting its biggest drop since December 2010 after the Federal Reserve downgraded its assessment of the economy and the expected path of rate increases into 2017.

On Monday, Fed Vice Chair Stanley Fischer said it is well expected the central bank will raise rates before year-end but the trajectory of the increases will be uncertain.

“This is an incredibly important week for Greece. The level of anxiety could run high but there is still optimism there will be a resolution between Greece and its creditors,” said Ed Atkins, Treasury strategist at RBS Securities in Stamford, Connecticut.

Tensions between the new Greek government and other members of the euro zone on the implementation of economic reforms in order to obtain aid have raised the possibility of the country exiting the economic bloc, a move that traders fear could roil financial markets.

Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel were set to meet for the first time later Monday as Tsipras seeks support from the head of the euro zone’s most powerful member.

In light, choppy trading, benchmark 10-year Treasuries notes were up 4/32 in price, yielding 1.915 percent, down 1.5 basis points from late on Friday.

Treasuries yields rose briefly with European yields following comments from European Central Bank President Mario Draghi who said he expected inflation to firm towards the end of the year.

The yield spread between 10-year Treasuries and 10-year German Bunds narrowed to 1.70 percent, the tightest in about three weeks as German yields bounced from last week’s record lows stemming from the ECB’s 1.1 trillion euro bond purchase program in a bid to help the euro zone economy.

The rock-bottom yields across Europe have spurred overseas demand for higher-yielding U.S. debt.

This week’s Treasuries fixed-rate supply will kick off with a $26 billion auction of two-year notes on Tuesday, followed by $35 billion of five-year debt on Wednesday and $29 billion of seven-year notes on Thursday .

(Editing by Bernadette Baum and Chizu Nomiyama)

Source Article from

This entry was posted in News & Info. Bookmark the permalink. Follow any comments here with the RSS feed for this post. Post a comment or leave a trackback: Trackback URL.

Post a Comment

Your email is never published nor shared. Required fields are marked *