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Yields keep rising, helped by US housing report

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U.S. government bond yields rose for a fourth session on Tuesday, getting a lift from unexpectedly strong data showing that home building remains a bright sector in the slowing U.S. economy.

Treasurys prices were already down before the housing data in a selling trend that began last week but has left yields well within recent ranges, according to senior bond strategist Ian Lyngen at CRT Capital.

"You can make a solid argument that Treasurys are trading with the European bonds," he said. European government bonds were also off in price on Tuesday.

Yields on the 30-year Treasury moved the most on Tuesday and last traded at 2.92 percent. That reflected a price decline of 26/32 but left the maturity's yield below the month's high of 2.97 percent hit Oct. 9.

The bellwether 10-year Treasury was last down 11/32 in price and yielded 2.06 percent.


Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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U.S. three-year Treasury notes were off 3/32 in price to yield 0.93 percent. U.S. five-year notes were down 5/32 and yielding 1.38 percent.

Treasurys trading was listless, with no major economic reports or events for traders to play off until next week's meeting of Fed policymakers weighing an end to near-zero interest rates.

"Inflation data will keep the Fed from moving, certainly in October," said Kim Rupert, managing director at Action Economics in San Francisco. "I give it 40-60 percent in December."

Housing starts rose smartly in September on soaring demand for rental apartments, the Commerce Department said in a report seen as encouraging a Federal Reserve interest rate hike.

Groundbreaking increased 6.5 percent to a seasonally adjusted annual pace of 1.21 million units in September, the sixth straight month that starts were above 1 million units. Economists polled by Reuters had forecast groundbreaking on new homes rising to a 1.15 million-unit pace last month.