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Treasuries Pare Gains on Call to Give Greece More Time

Oct. 18 (Bloomberg) -- Treasuries pared a gain after Austrian Chancellor Werner Faymann said Greece should get more time on budget targets as European Union leaders gathered for a two-day meeting in Brussels.

U.S. government debt advanced earlier, after the biggest two-day selloff in seven months, as German Chancellor Angela Merkel said Greek reforms were moving at a “snail’s pace” while clashes broke out in central Athens during a second general strike in three weeks. Thirty-year yields earlier slid for the first time in four days as the Labor Department reported that initial jobless claims rose more than forecast last week.

“There was a favorable headline for Greece, talking about positive developments, and the market started to trade off,” said Brian Edmonds, head of interest rates in New York at Cantor Fitzgerald LP, one of 21 primary dealers that trade with the Fed. “As we do back up and see a move to higher rates, there are willing buyers.”

The benchmark 10-year yield was little changed at 1.81 percent at 12:13 p.m. New York time, according to Bloomberg Bond Trader prices, after touching 1.78 percent. The 1.625 percent note due August 2022 gained 1/32, or 31 cents per $1,000 face amount, to 98 9/32. The yield rose 16 basis points over the previous two days, the most for a two-day period since March 14, and yesterday surpassed the 200-day moving average of 1.808 percent.

Yields on 30-year bonds fell one basis point, or 0.01 percentage point, to 2.99 percent after climbing above 3 percent yesterday for the first time since Sept. 19.

The U.S. plans to auction $7 billion of 30-year Treasury Inflation Protected Securities, with the securities poised to draw a record-low yield.

To contact the reporters on this story: Susanne Walker in New York at swalker33@bloomberg.net; Neal Armstrong in London at narmstrong8@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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