By Deborah Levine, MarketWatch
SAN FRANCISCO (MarketWatch) -- Treasury prices erased an earlier
gain on Monday in thinned Christmas Eve trading, with the major
point of discussion remaining U.S. lawmakers' inability to
negotiate a way to avert the fiscal cliff -- a steep falloff in
economic activity feared to coincide with the looming expiration of
tax breaks and the onset of spending cuts.
"Nothing major will be decided before January," said Andrew
Brenner, head of international fixed income at National Alliance
Securities. "There is about a 10% chance that something gets done
before year-end."
However, he also noted that worries about a possible recession
should the U.S. go over the fiscal cliff may be overdone, as the
nation's housing industry recovers. Analysts have also pointed to a
possible boom in the domestic energy industry as well as very easy
monetary policy in the world's major economies as factors that
could all help growth going.
Yields on 10-year notes (10_YEAR), which move inversely to
prices, turned up 1 basis point to 1.78%, from 1.76% earlier. A
basis point is one one-hundredth of a percentage point.
Yields on 30-year bonds (30_YEAR) rose 1 basis point to
2.95%.
Five-year yields (5_YEAR) increased 1 basis point to 0.78%.
Bond markets have a 2 p.m. Eastern recommended early close,
while U.S. stocks close at 1 p.m. Both will be shut Tuesday for
Christmas.
On Friday, Treasury prices rallied as hopes for a deal to avert
the fiscal cliff appeared to unravel.
Congress is out of session for the holiday as well, while
President Barack Obama went to Hawaii.
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