By Deborah Levine
Treasury prices declined Monday, pushing yields higher, as bond
traders took action ahead of a slew of government debt auctions
this week that will feature $57 billion in bills and $8 billion in
20-year inflation-indexed securities.
The Treasury Department also will put record amounts of two- and
five-year notes up for bid, reducing investors' willingness to buy
higher amounts at yields already near the lowest ever.
Ten-year note yields (UST10Y) rose 2 basis points, or 0.02%, to
2.64% in early action. Bond prices move inversely to their
yields.
"We see bond markets under pressure as actual and planned
issuances surge," especially as foreign official buyers having less
ability to invest in U.S. debt, said analysts at UBS
Securities.
This will be especially so as foreign central banks become less
able or willing to invest in U.S. debt, the analysts wrote in a
research note.
Also pressuring bonds, leading U.K. bank Barclays (BCS) said it
didn't need any more capital, pushing overseas equities higher.
Shorter-term yields were little changed before a report at 10
a.m. Eastern time that's expected to show U.S. sales of existing
homes slowed to a 4.36 million pace in December, according to the
median estimate of economists surveyed by MarketWatch.
In a sign that the economic slump in the U.S. will continue,
companies in several industries announced plans to slash jobs
Monday. That may eventually lead the government to increase its
already mammoth stimulus proposal.
Construction-equipment maker Caterpillar (CAT) said it would cut
20,000 jobs, and Home Depot (HD) said it would cut its workforce by
about 7,000 jobs.
Sprint Nextel (US-S) it will eliminate 8,000 jobs in the first
three months of 2009.
"Bonds are off on the continuing realization of stimulus funded
by supply" of more debt, said Andrew Brenner, co-head of structured
products and emerging markets at MF Global.
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