ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)

image_pdfimage_print

Treasury yields wavered on Monday, pushing modestly higher, following last week’s brisk pace of purchases in U.S. government bonds, as the market shifts its attention to gauges of economic health and Greece’s bailout talks.

Investors are awaiting the outcome of a meeting of the Greek Prime Minister Alexis Tsipras with the German Chancellor Angela Merkel on Monday, said Jonathan Rick, interest-rate derivatives strategist at Crédit Agricole.

The uncertainty around the Greek bailout that appears to be in a stalemate creates volatility that puts investors on a flight to safety, driving Treasury yields down, Rick said.

Yields moved higher amid weaker-than-expected existing home sales on Monday.

Last week, 10-year Treasurys shed 17.8 basis points, falling to their lowest level since Feb 6., after the Federal Reserve indicated last week that it likely would raise rates at a slower pace than expected,

Meanwhile, sales of existing homes rose 1.2% in February to a seasonally adjusted annual rate of 4.88 million, the National Association of Realtors reported Monday. But the gain was below expectations and proved that existing-home sales remain soft.

The yield on the benchmark 10-year Treasury note declined 0.7 basis point to 1.925% but later rose to 1.93%, according to Tradeweb. The two-year note yield dropped 0.4 basis points to 0.581% and then recovered to 0.585. And the 30-year bond yield gained 1.5 basis points to 2.519%.

Falling oil prices could prove another drag on Treasury yields after Saudi Arabia’s energy minister said that his country would only cut output if countries outside the OPEC did so as well.

“Lower oil prices translate into lower inflation, which means that the inflation premium priced into bond yields decreases as well,” Rick explained.

This week will also be dominated by an unusually large number of public appearances by Fed officials, who likely will refine the message from last week’s FOMC policy meeting.

The Fed’s own projections, for where the funds rate would be at the end of the year, its so-called dot plot (http://www.marketwatch.com/story/fed-dot-plot-show-slower-pace-of-rate-hikes-fed-funds-ending-2015-at-0625-2015-03-18), slipped.