Treasury prices fall after market closes lower

Reuters with


U.S. Treasurys fell after the market closed lower, with the Dow ending its longest win streak for the year.

Earlier on Monday, prices rose after business activity data showed growth slowing in France and elsewhere in the euro zone.

After the market close, benchmark 10-year notes were down 5/32 to yield 2.63 percent, versus 2.61 percent on Friday. The 10-year notes yielded 3 percent at the beginning of 2014.

Prices of 30-year bonds were down 10/32 to yield 3.45 percent, down from Friday's 3.44 percent.

The was unchanged at a yield of 0.46 percent ahead of a Tuesday auction.

were down 3/32 in price to yield 1.70 percent after yielding as little as 1.68 percent.

The earlier gains, which left yields on benchmark 10-year Treasurys well within a trading range in place since February, narrowed when unexpectedly strong U.S. factory data was published.

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In contrast, European data boosted prices on Monday morning. The euro zone's flash composite purchasing managers' index fell to 52.8 in June, below forecast, from 53.5 in May, data provider Markit said.

Germany, Europe's largest economy, was the driving force in the composite index, although its PMI eased to 54.2 from 55.6.

The French index slumped to 48.0 from 49.3, its lowest reading since February.

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"If Europe cannot post acceptable GDP growth, then it's unlikely that China and other parts of the world can be solid too," Shipley said. "Then the U.S. looks more attractive."

Earlier, during the Asian trading day, reports showed manufacturing in China and Japan returning to growth in June after months of decline.

Jim Vogel, interest rate strategist at FTN Financial, described Treasurys trading as segmented. Buyers of longer maturities eye global events rather than accumulating data suggesting American economic growth is accelerating, he said.

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"We are not trading U.S. economic data today but we may do so on a lag basis," Vogel said. "It will have a cumulative, stronger effect as we get other, stronger data, particularly if we continue to see some improvement in single-family real estate. It would indicate that the household sector is alive and kicking."

U.S. data on Monday showed factory activity expanding strongly in June, with financial data firm Markit's preliminary manufacturing purchasing managers index at its highest level since May 2010. A separate report had home resales higher than forecast during May.

Neither economic report much affected Treasurys trading, Vogel said, adding that three-year and five-year Treasurys were most sensitive to U.S. economic reports.

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"I think that's where you'd see the weakness occur first, where as 10s and 30s have more of an international tone than the shorter part of the curve," Vogel said.

The Treasury is also due to sell $94 billion in new debt, including $30 billion in two-year notes on Tuesday, $35 billion in five-year notes on Wednesday and $29 billion in seven-year notes on Thursday.

—By Reuters. contributed to this report.