Bloomberg News

U.S. 10-Year Yields Approach One-Month High Before Home Sales

February 22, 2012

Feb. 22 (Bloomberg) -- U.S. 10-year note yields approached a one-month high before an industry report that economists said will show sales of existing homes increased for a fourth month, damping demand for the safest securities.

Five-year debt held three days of losses as the government prepared to auction $35 billion of the securities today, part of $99 billion of notes it is selling this week. European finance ministers approved a 130 billion-euro ($172 billion) aid package for Greece yesterday, reducing the appetite of investors for haven assets.

“There’s still this upward push from the economic side” for Treasury yields, said David Schnautz, a fixed-income strategist at Commerzbank AG in London. “The healing process is ongoing and so from a pure level perspective, 10-year yields at the vicinity of 2 percent are not that appropriate on a long- term basis.”

The 10-year note yielded 2.07 percent at 10:09 a.m. London time, according to Bloomberg Bond Trader prices. The 2 percent bond due in February 2022 fell 1/32, or 31 cents per $1,000 face amount, to 99 13/32. The yield climbed to 2.08 percent earlier today, the highest since Jan. 24.

Sales of existing U.S. homes rose to an annual rate of 4.66 million in January, from 4.61 million the previous month, based on a Bloomberg News survey of economists before the National Association of Realtors’ report today.

Treasuries dropped yesterday as the approval of Greece’s bailout package reduced demand for the U.S. government’s $35 billion auction of two-year notes. Investors bid for 3.54 times the amount of available debt, down from 3.75 in January.

The five-year notes being sold today yielded 0.94 percent in pre-auction trading, compared with 0.899 percent at the previous offering on Jan. 25. The record low for the monthly sales was 0.88 percent in December.

--Editors: Nicholas Reynolds, Paul Dobson

To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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