Treasury 30-year bonds rose for the first time in three days, reversing earlier losses, as investors bet yields at 14-month highs offered enough of a premium amid speculation the Federal Reserve will slow asset purchases.
Treasury 10-year note yields traded at almost the highest level in 13 months as the U.S. prepared to sell $29 billion of seven-year securities and traders speculated whether the Federal Reserve will consider reducing stimulus.
Treasury 10-year yields reached the highest level in almost seven weeks after a report showed U.S. retail sales unexpectedly increased in April, renewing optimism central-bank efforts to spur economic growth are working.
Treasury 10-year note yields fell to the lowest level this year as a report showing reduced business activity in April reinforced speculation the Federal Reserve won’t scale back unprecedented monetary stimulus.
The collapse in price swings of U.S. government debt to a four-year low shows increasing investor confidence that yields will stay at about record lows amid growing competition for a dwindling supply of the safest assets.
Treasury two-year note yields fell to the lowest level this year as Federal Reserve Chairman Ben S. Bernanke said the central bank should maintain record monetary stimulus to boost an “uneven” economic recovery.
Treasury Inflation-Protected Securities tumbled after a record $18 billion auction of the notes attracted the lowest demand in more than four years with the economy showing few signs of rising consumer prices.
Treasuries rose for an eighth day, the longest run of gains in almost four years, as investors seeking a refuge from Europe’s sovereign-debt crisis bolstered demand at the U.S. auction of $35 billion in five-year notes.