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Treasuries Fall Before Auction as Europe's Growth Exceeds Earlier Estimate
Treasuries fell, erasing earlier gains, after a report showed the euro region’s economy grew at a faster pace than previously estimated, easing concern that the global recovery is stalling.
Ten-year yields rose before the U.S. sells Treasury Inflation Protected Securities of that maturity today and announces how much it plans to raise in auctions of 3-, 10- and 30-year debt scheduled for next week. The rise in yields may be limited before a report today forecast by economists to show contracts to buy U.S. homes fell for a third month.
“The market is very stretched and yields are at extremely low levels, making it vulnerable to pullbacks,” said Luca Jellinek, head of European interest-rate strategy at Credit Agricole SA in London. “The data today may have shown some improvement in the euro zone economy, but it didn’t say anything exceptional. It just shows how vulnerable the market is.”
The benchmark 10-year note yield rose 1 basis point, or 0.01 percentage point, to 2.59 percent at 6:35 a.m. in New York, according to BGCantor Market Data. It dropped earlier to 2.55 percent. The price of the 2.625 percent security maturing in August 2020 fell 1/8, or $1.25 per $1,000 face amount, to 100 9/32. Two-year yields gained 1 basis point to 0.52 percent, compared with the all-time low of 0.4542 percent set on Aug. 24.
The 16-nation euro region’s gross domestic product rose a revised 1.9 percent in the second quarter from last year, the European Union’s statistics office said today. The office had previously reported a gain of 1.7 percent. Exports surged the most on record.
U.S. Auction Amount
The Treasury will sell $67 billion of 3-, 10- and 30-year securities next week, the smallest combination of the maturities since July 2009, according to a survey of the primary dealers required to bid on the debt.
The monthly auctions will be made up of $33 billion in 3- year notes, $21 billion in 10-year debt and $13 billion in 30- year bonds, according to the median forecast in a Bloomberg News survey of 10 of the 18 Wall Street firms that trade directly with the Federal Reserve. That’s down from $74 billion in August and a record-tying $81 billion in February. The Treasury will announce the amounts at 11 a.m. New York time.
To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net
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