Bonds Fall on Europe Optimism, Strong Data |
By Karen Brettell
NEW YORK (Reuters) - U.S. Treasuries slipped on Wednesday, more than reversing Tuesday's gains, as speculation that the ECB could take decisive steps to combat turmoil in the region lifted risky assets including stocks and reduced demand for safe-haven debt.
Strong economic data and profit taking added to price weakness.
Speculation grew on Wednesday that the European Central Bank could unveil new anti-crisis measures after it meets on Thursday, including possibly new purchases of government bonds. The ECB declined to comment on the bond purchase speculation.
"We've got a lot of traders, particularly in Europe, hopeful that the European central bank is going to address a great deal of more support for weaker sovereigns," said Jim Vogel, interest rate strategist at FTN Financial in Memphis, Tennessee.
Also, "investors were looking for an opportunity to reduce their positions in high grade government bonds," he added.
Benchmark 10-year Treasury notes
The 30-year bond
Long-dated U.S. Treasury debt prices fell to session lows after the ADP National Employment Report showed stronger-than-expected job growth in the private sector in November.
"There has been anecdotal evidence that there is more hiring this year. This confirms other indicators that the economy is reaccelerating," said John Canally, investment strategist at LPL Financial in Boston.
Treasury yields may be set to rise further as investors price in the possibility of rising inflation as more data shows further economic improvement.
"We would expect Treasuries to give back as the immediate panic recedes and the U.S. gets better economic news," said Brian Yelvington, fixed income analyst at Knight Securities in Greensich, Connecticut.
The Federal Reserve will purchase between $7 billion and $9 billion of notes due between 2016 and 2017 later on Wednesday.
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