The months-long bull run in the Treasury bond market showed more signs of petering out Friday.
A strong 55.3% reading on the manufacturing index from the Institute for Supply Management boosted optimism that the U.S. economic recovery could strengthen after the recent soft patch. That provided a fresh catalyst for investors to push down benchmark bond prices for a fifth straight session, setting the market up for the longest losing streak since early February.
Many investors have flocked out of safe-haven Treasurys and into stocks this week following positive developments in Greece that reduced the risk of a default next month. Some U.S. economic releases have also been better-than-forecast at the same time some investors are feeling cautious about the outlook for the bond market after the Federal Reserve completed its $600 billion QE2 bond buying program Thursday--both these events also spurred investors out of Treasurys.
"The fear trade is pulling back on good news from Greece and the U.S. economic releases," said Jason Rogan, director of U.S. government bond trading in New York at Guggenheim Partners LLC.
Adding to the mix, there's the ongoing political impasse between Democrats and Republicans to hammer out a deal to shrink the U.S.'s fiscal deficit, the key hurdle for Congress to raise the debt ceiling. Treasury officials have warned in recent weeks that the U.S. government could default if lawmakers don't raise the borrowing limit--a scenario that would send Treasury yields soaring and roiling global financial markets and the global economy.
In recent trading, the benchmark 10-year note was 12/32 lower in price to yield 3.205%. Bond yields move inversely to their prices.
The 10-year note's yield earlier touched 3.223%, the highest since May 19 when it reached 3.241%. That was a sharp rise from the six-month low of 2.842% hit on Monday.
"There has been a lot of damage in a short period of time for the bond market," said Rick Klingman, managing director of Treasury trading at BNP Paribas in New York. Klingman said 3.25% is the key level to watch-a break above that could push the yield to as high as 3.4%.
The 30-year note fell 12/32 to yield 4.401%, and the two-year note shed 2/32 to yield 0.490%.
A strong 55.3% reading on the manufacturing index from the Institute for Supply Management boosted optimism that the U.S. economic recovery could strengthen after the recent soft patch. That provided a fresh catalyst for investors to push down benchmark bond prices for a fifth straight session, setting the market up for the longest losing streak since early February.
Many investors have flocked out of safe-haven Treasurys and into stocks this week following positive developments in Greece that reduced the risk of a default next month. Some U.S. economic releases have also been better-than-forecast at the same time some investors are feeling cautious about the outlook for the bond market after the Federal Reserve completed its $600 billion QE2 bond buying program Thursday--both these events also spurred investors out of Treasurys.
"The fear trade is pulling back on good news from Greece and the U.S. economic releases," said Jason Rogan, director of U.S. government bond trading in New York at Guggenheim Partners LLC.
In recent trading, the benchmark 10-year note was 12/32 lower in price to yield 3.205%. Bond yields move inversely to their prices.
The 10-year note's yield earlier touched 3.223%, the highest since May 19 when it reached 3.241%. That was a sharp rise from the six-month low of 2.842% hit on Monday.
"There has been a lot of damage in a short period of time for the bond market," said Rick Klingman, managing director of Treasury trading at BNP Paribas in New York. Klingman said 3.25% is the key level to watch-a break above that could push the yield to as high as 3.4%.
The 30-year note fell 12/32 to yield 4.401%, and the two-year note shed 2/32 to yield 0.490%.
