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TREASURIES-U.S. bonds rise; light buyside bid for 3-month bills

Ellen Freilich
Monday, 18 Nov 2013 | 1:16 PM ET

* Record highs on Wall Street restrain gains for safe-haven debt

* Lightest buyside demand for 3-month bill auction since July

* Three-month bills to mature after Feb. 7 debt ceiling mark

* Retail sales, consumer price, home sales data due on Wednesday

NEW YORK, Nov 18 (Reuters) - U.S. Treasury debt prices rose on Monday, supported by the prospect of "easy" monetary policy, but gains were limited by investors' preference for riskier assets.

U.S. stocks advanced as the Dow and the S&P 500 climbed to record highs, reacting to prospects for continued economic stimulus from the Federal Reserve.

Continued reaction to comments from the likely next Fed Chairperson Janet Yellen drove the Treasury market's gains, said Kevin Giddis, head of fixed income capital markets head at Raymond James.

Better buying in the middle of the maturity curve from international real money accounts and curve flattening trades from various accounts were two features of the trading, said Thomas di Galoma, co-head of fixed income rates at ED&F Man Capital in New York.

THREE-MONTH TREASURY BILL AUCTION

The Treasury's weekly sales of three- and six-month bills resulted in the lightest buyside demand since July for three-month bills, said Stone & McCarthy Research Associates analyst Cathy Guo.

The six-month bills drew a better bid than the three-month bills.

"The maturity date of the three-month bills in late February may have something to do with it, but investors will be cautious with front-end investments around the time that the debt ceiling is reinstated," said Thomas Simons, vice president and money market economist at Jefferies in New York.

As of now, the Treasury is allowed to issue as much debt as needed through Feb. 7. At that point, Congress must raise the debt limit to let the Treasury increase the total amount of official borrowing.

The benchmark 10-year Treasury note rose 7/32, leaving its yield at 2.69 percent.

Absent fresh economic data, there was little besides the backdrop of monetary accommodation and the lure of riskier assets to guide the U.S. Treasury market on Monday.

Wednesday is the first day of the week offering a basket of fresh economic data. Figures on October retail sales, consumer prices, and home sales are due that day.

"Wednesday is when the fireworks could begin: Retail sales, the consumer price index, existing home sales and minutes from the October 29-30 Fed policy meeting could make trading U.S. government securities quite interesting," Giddis said.

The 30-year bond rose 15/32 in price at 99-19/32 for a yield of 3.77 percent.