Treasuries rose, snapping a decline from yesterday, on speculation data today will show U.S. retail sales fell for the first time in a year, supporting the case for the Federal Reserve to expand stimulus measures.
Demand for the perceived safety of U.S. bonds was bolstered before Italy sells government notes this week and Greece holds general elections on June 17 amid concern Europe’s debt crisis is spreading. The U.S. is scheduled to sell $21 billion of 10- year securities today in the second of three note auctions this week totaling $66 billion.
“Demand for Treasuries is likely to remain strong as the European debt crisis continues and the U.S. economy softens,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $70 billion in Tokyo. “There are increasing expectations for some Fed action.”
The yield on the 10-year note fell two basis points, or 0.02 percentage point, to 1.64 percent at 9:50 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 1.75 percent note due in May 2022 gained 6/32, or $1.88 per $1,000 face amount to 100 31/32. The rate yesterday rose eight basis points.
U.S. retail sales probably declined 0.2 percent in May after rising 0.1 percent the prior month, according to the median estimate of economists in a Bloomberg News survey taken before data are released today.
Italy is scheduled to sell 6.5 billion euros ($8.1 billion) of 364-day bills today and offer debt maturing in 2015, 2019 and 2020 tomorrow. The yield on the nation’s benchmark 10-year government bond rose to as high as 6.3 percent yesterday, approaching the 7 percent level that led to bailouts in Greece, Ireland and Portugal.
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