NEW YORK: US Treasuries yields declined on Thursday as a batch of disappointing economic reports revived worries about the US economy and prompted further questions whether the Federal Reserve will raise interest rates later this year.
Weaker-than-expected data on existing home sales, the manufacturing sector and US Mid-Atlantic business activity came a day after the central bank signaled a June rate hike is doubtful following an anemic first-quarter.
Fed policy-makers expressed at their April 28-29 meeting they would like to see further economic improvement to decide on ending their near zero interest rate policy stand, according to minutes released on Wednesday.
“The economic news is still soft in the second quarter,” said Gary Pollack, head of fixed-income trading for private wealth management at Deutsche Bank Asset and Wealth Management in New York.
While most Wall Street economists forecast the Fed to raise rates by year-end, many of them said the Fed may postpone such a move until 2016 if more weak data comes to the surface.
Treasuries yields declined further on an emergence of month-end portfolio buying tied to an expected adjustment of a widely-followed Treasuries market index that includes more longer-dated issues, analysts said.
In early US trading, benchmark 10-year Treasuries were up 11/32 in price with a yield of 2.211 percent, down 4 basis points from late Wednesday.
The 30-year bond was up 28/32 in price, yielding 3.006 percent, down 4.5 basis points on the day.
US bonds’ tied to their European counterparts eased somewhat as Bund and peripheral yields edged up on 15 billion euros of sovereign debt offered by France and Spain.
Selling pressure on Treasuries from the domestic corporate bond sector also eased heading into a three-day US holiday weekend.
More than $42 billion worth of investment grade corporate bonds have been sold so far this week, putting May on pace as a record month for issuance, according to IFR, a unit of Thomson Reuters.
Less corporate supply might bolster interest in the $13 billion auction of 10-year Treasury Inflation Protected Securities (TIPS) at 1 p.m. (1700 GMT), analysts said.
