Treasury yields had the biggest weekly increase in almost three months as bets European leaders may make progress stemming their debt crisis damped haven demand and the US prepared to sell $66 billion of notes and bonds.
US bond yields climbed amid reduced volume after tumbling to record lows on June 1. European officials were awaiting a request for aid to shore up Spanish banks, European Central Bank Vice President Vitor Constancio said yesterday. Federal Reserve Chairman Ben S Bernanke said on June 7 the US has options for further monetary easing.
“There has been cautious optimism that Europe is ready to get their act together," said Larry Milstein, managing director in New York of government and agency debt trading at R W Pressprich & Co, a fixed-income broker and dealer for institutional investors. "And the market still has supply to deal with. Still, policy makers seem to only act when they are at the edge of a cliff.”
The 30-year bond yield increased 23 basis points, or 0.23 percentage point, to 2.75 per cent yesterday in New York, according to Bloomberg Bond Trader prices, from 2.52 per cent on June 1. It was the biggest jump since the five days ended March 16. The 3 per cent security due in May 2042 slid 4 7/8, or $48.75 per $1,000 face amount, to 105 5/32. Ten-year note yields increased 18 basis points, also the most since March 16, to 1.64 per cent.
Volume drops
Trading volume shrank. About $227 billion of Treasuries changed hands this week through ICAP Plc, the world's largest interdealer broker. It was a 36 per cent drop, the most since the five days ended May 25. Volume surged 148 per cent last week to $351 billion.