US bond prices fall as stock gains pare bids


Treasurys fell on Monday as stronger U.S. stock prices reduced safe-haven demand for bonds, though traders remained wary about the future of cash-strapped Greece staying in the euro zone bloc.

Benchmark yields hovered at their lowest levels in about two weeks as disappointing domestic data supported the view that the U.S. Federal Reserve will likely refrain from raising interest rates until later this year.

"There was a flight-to-quality bid before last weekend from Greece. You are now giving some of it that back," said Thomas Roth, executive director of U.S. government trading at Mitsubishi UFJ Securities USA in New York.

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The three major Wall Street indexes rose on upbeat earnings from Morgan Stanley and Hasbro following steep losses on Friday. The Standard and Poor's 500 index was up 0.9 percent in late trading after falling 1.13 percent on Friday on tepid U.S. earnings and renewed Greece worries, among other factors.

On light trading volume, benchmark 10-year Treasurys notes were yielding 1.88 percent, up 2 basis point from late on Friday. The 30-year bond was yielding 2.55 percent, up 4 basis points from Friday.

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The retreat in the U.S. government bond market came as there was little progress on a debt deal between Greece and its creditors.

European Central Bank officials have downplayed the chances of Greece leaving the euro zone, while there have been reports about Greece and regional policy-makers considering contingencies if such a move occurs.

ECB Governing Council member Ewald Nowotny told CNBC on Monday that a Greek exit would have less impact than it would have had two years ago. Amid the risk of a Greek exit, which would hurt Europe and possibly the global economy, and recent weak domestic data, some Fed officials have been cautious on the U.S. central bank ending its near-zero rate policy too soon.

The data will ``hopefully'' support a rate hike later this year, New York Fed President William Dudley said at the Bloomberg Americas Monetary Summit on Monday. But ``the timing of normalization remains uncertain because how the economy evolves is also uncertain,'' he added.