MW: Treasurys edge lower as stocks, oil futures gain
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices came under modest pressure on Tuesday, pushing up yields, as U.S. stocks opened higher and oil prices rose, indicating more comfort among investors in moving assets to riskier sectors.
Bond losses were limited amid further reports of Greece having to take steps to slash its debt.
Yields on 10-year notes (UST10Y 3.71, +0.02, +0.46%) rose 2 basis points, or 0.02%, to 3.72%. Bond yields move inversely to prices.
Yields on 2-year debt (UST2YR 0.83, +0.01, +1.47%) increased 1 basis point to 0.84%.
In the energy pits, prices on benchmark crude oil rose above $75 a barrel, up more than 2%. See more on oil.
Treasurys extended losses slightly after a Treasury Department report showed total holdings of U.S. equities, notes and bonds increased by a net $63.3 billion in December, down from $126.4 billion in the previous month.
Official international demand, meaning from central banks and governments, for Treasurys increased by $22 billion in December, compared with a gain of $31.2 billion in November. Private purchases of Treasurys rose by $48 billion after purchases of $86.7 billion in the previous month.
The report also indicated a shift from short-term bills into notes and bonds, analysts said.
Still, the December Treasury International Capital, or TIC, report, showed buying that was above monthly averages, according to strategists at CRT Capital Group.
"Our takeaway is that while month-over-month TIC can be deceptive and volatile, the final months of last year -- when rates were notably rising and the dollar strengthening -- were truly massive for Treasurys versus dead neutral for everything else," they said in a note.
"The market couldn't care less, but the overseas buying at least speaks to a sponsorship for various reasons," CRT Capital wrote.
Bonds stayed down after the Federal Reserve Bank of New York said factory activity in the Empire State region expanded at a faster pace in February. The New York Fed's manufacturing index rose more than some analysts anticipated, to a reading of 24.9 in February from 15.9 in January.
Also on the data front, the National Association of Home Builders' index is due out at 1 p.m. Eastern time and is expected to show confidence improved slightly this month. See economic preview of the week's data.
Across the Atlantic, European finance ministers demanded fresh budget cuts from Greece if a review of the country's debt-slashing measures doesn't meet approval next month. See more on Greece.
Bond markets were closed on Monday for Presidents Day.
Traders will also listen for any comments about the economic outlook or monetary policy from a trio of Federal Reserve officials.
Kansas City Fed President Thomas Hoenig will speak at a budget policy forum at 12 p.m. Eastern, while Atlanta Fed President Dennis Lockhart will speak on early education at 12:30 p.m. and Minneapolis branch President Narayana Kocherlakota speaks on the economy at 12:45 p.m.
Treasurys declined last week, pushing 10-year yields to the highest in a month, as the market absorbed $82 billion in government debt sales. Also, remarks made by Federal Reserve Chairman Ben Bernanke hinted at steps the central bank may take toward unwinding some of its ultra-easy monetary policies. See Friday's bond column.
