U.S. Treasury debt prices eased on Tuesday as Wall Street stock indexes pushed to record highs, with investors turning away from safe-haven assets as higher government spending in China and solid U.S. data stoked an appetite for riskier holdings.
China's outgoing Premier Wen Jiabao on Tuesday announced record government spending in 2013 that will sustain growth, cheering investors who see the economic powerhouse helping to offset slow recoveries elsewhere.
That news helped boost the Dow Jones industrials to an all-time high, beating 2007 records.
Stocks were supported, and Treasurys undermined, also by data showing the pace of growth in the huge U.S. services sector rose to its fastest in a year in February.
While Treasury yields rose, they remained within recent ranges as investors saw little to change their views on easy monetary policy in the United States and elsewhere.
"We are not off as much as you may intuitively expect with equities up as much as they are," said Wilmer Stith, co-portfolio manager of the Wilmington Broad Market Bond Fund in Baltimore.
Treasurys still found some support from expectations the Federal Reserve will continue purchases of $85 billion per month of mortgage-backed securities and Treasurys through the year in an effort to reduce the unemployment rate, which stood at 7.9 percent in January.
"Until we see significant gains in payrolls, until we see unemployment come down to around 6.5 percent, it should be more or less steady as she goes," Stith said.
Benchmark 10-year Treasury notes traded 5/32 lower in price to yield 1.90 percent, up slightly from 1.88 percent late Monday, while 30-year bonds traded 12/32 lower to yield 3.11 percent from 3.09 percent.
"Stocks are close to fair value, but very cheap relative to the bond market and to cash, which is very expensive," said David Kelly, managing director and chief market strategist at JP Morgan Asset Management in New York.
"The central banks are making it impossible for fixed-income investors to make a good return. That means investors have to be overweight equities and they are moving toward that," he added.
However, some analysts said Treasurys would need a bigger jolt to move to new levels.
"We're not really making any real headway either way," said Justin Lederer, Treasury strategist at Cantor, Fitzgerald in New York. "You really need a major headline" to push Treasurys into a new range.
Investors may also be hesitant to take large positions ahead of a European Central Bank meeting on Thursday and U.S. February payrolls data on Friday.
Friday's nonfarm payrolls data is seen pointing to ongoing healing in the U.S. labor market, with analysts in a Reuters poll calling for gains of 160,000 jobs in February.