By Deborah Levine
Treasury prices rose Tuesday, and head for gains for March,
helped by disappointing economic data and investors buying U.S.
debt at the end of the quarter to show less risky holdings in their
accounts.
Gains in U.S. equity markets limited the upside in government
debt, however.
Yields on 10-year notes (UST10Y) declined 1 basis point, or
0.01%, to 2.71%.
Two-year note yields (UST2YR) also gave up basis point to stand
at 0.83%.
Bond yields move in the opposite direction of prices.
Benchmark 10-year notes have rallied this month, pushing yields
down from 3.04% on Feb. 27.
However, for the quarter, yields are up from 2.25% on Dec.
31.
Similarly, 2-year note yields have fallen this month but are
higher from the beginning of the quarter.
Traders also noted that it is the last day of the quarter for
many firms and the end of the fiscal year for other firms, as well
as Japan.
Treasurys of all maturities have returned 2.01% in the month
through Monday, according to an index compiled by Merrill Lynch.
For the quarter, U.S. debt has lost 1.67%.
Corporate bonds have lost 1.59% this year, according to
Merrill
By comparison, the Standard & Poor's 500 Index (SPX) has
dropped 11.9% in 2009.
Treasury prices were lower in earlier trading after the
Case-Shiller index said home prices fell a record 2.8% in January
from December.
Separately, an index on manufacturing in the Chicago area for
March hit the lowest level since 1980. Economists had expected the
index, compiled from a survey of local purchasing managers, would
improve.
Rounding out the day's data, consumer confidence ticked up in
March from a record low in February, but the improvement wasn't as
much as had been anticipated.
The Conference Board's index rose to 26 from an upwardly revised
25.3 in February. Economists surveyed by MarketWatch had expected a
March reading of 28.
"Equity markets rallied over the past few weeks, an encouraging
sign for consumers, but greater optimism about business conditions
will likely be offset partly by rising unemployment and uncertainty
about job prospects," said analysts at Barclays Capital.
Debt issuance, and a buyer
U.S. debt continues to be under pressure as the government
breaks records with the amount of debt it's been sells in order to
finance its economic-stimulus measures and programs to support
financial markets.
"Treasury yields have generally trended higher during the
quarter as supply pressures have mildly trumped downshifting growth
expectations," said strategists at UBS Securities.
Investors also have been eyeing the extent of the Federal
Reserve's recent purchases of Treasurys.
On Monday, the central bank bought $2.5 billion in bonds
maturing in 17 to 30 years. That followed $15 billion in
shorter-dated debt bought last week to kick off a massive purchase
plan designed to force borrowing costs lower.
On Wednesday, the Fed said it will purchase debt maturing from
2012 and 2013.
In another part of the Fed's plan to make mortgages more
affordable, it continued buying debt sold by housing agencies
Fannie Mae (FNM) and Freddie Mac (FRE) and the Federal Home Loan
Banks. It bought $3.2 billion in securities from them on
Tuesday.