Treasuries headed for their first monthly decline since October on speculation optimism about the U.S. recovery and a European Central Bank allotment of loans today will bolster investor appetite for higher-yielding assets.
U.S. government securities handed investors a 0.5 percent loss in February as of yesterday, according to Bank of America Merrill Lynch indexes, dropping as the economy showed signs of improvement. The ECB will grant euro-region banks 470 billion euros ($633 billion) in its second offering of three-year loans today, according a Bloomberg News survey of analysts.
Concern about “the euro area for the time being seems to be a diminished factor,” said Alessandro Mercuri, an interest-rate strategist at Lloyds Bank Corporate Markets in London. “If the euro area painfully and slowly sorts itself out we should see yields moving higher towards 2.25 percent in the next three-to-six months, because we’re optimistic about the ability of the U.S. economy to keep growing.”
The 10-year note yielded 1.96 percent at 10:08 a.m. London time, according to Bloomberg Bond Trader prices. The 2 percent security due February 2022 traded at 100 11/32. The yield has climbed from 1.8 percent at the end of January.