Treasuries rose, breaking the longest streak of weekly losses since 2009, amid skepticism the Federal Reserve is about to slow its bond-buying program designed to hold down borrowing costs and spur the economy.
Ten-year note yields dropped for the first week since April after reaching a 14-month high as investors weighed whether the economy is strengthening enough for policy makers to consider reducing their quantitative-easing stimulus. The U.S. sold $66 billion in notes and bonds to below-average demand. Fed Chairman Ben S. Bernanke and the policy-setting Federal Open Market Committee start their two-day meeting Tuesday.
"It's the calm before the storm for the Treasury market," said Aaron Kohli, an interest-rate strategist in New York at BNP Paribas SA, one of 21 primary dealers that trade with the central bank. "The realῌ῍ity is the bloodletting could continue a little bit longer if the Fed disappoints at the next meeting. The Fed has control over the tenor and the tone of the Treasury market. The area where the street is still adjusting expectations is the speed of tapering."
U.S. 10-year yields fell four basis points, or 0.04 percentage point, to 2.13 percent last week in New York, according to Bloomberg Bond Trader data. The price of the 1.75 percent note due May 2023 advanced three-eighths, or $3.75 per $1,000 face amount, to 96῍.
The benchmark yield climbed to 2.29 percent on June 11, the highest since April 2012, after reaching a 2013 low of 1.61 percent May 1. It rose six weeks until June 7, the longest since May 2009. "The market is in the process of refining Fed policy expectations," said Ian Lyngen, a bond strategist at CRT Capital Group LLC in Connecticut.