By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices swung slightly higher
Monday, but traded in a narrow range, as the government debt market
prepares for a slew of debt sales.
The 10-year Treasury note (10_YEAR) yield, which falls as prices
rise, was down a basis point at 2.782%. The 30-year bond (30_YEAR)
yield fell slightly to 3.722%, and the 5-year note (5_YEAR) yield
fell 1.5 basis points to 1.626%.
During a quiet week for the bond market, investors will look to
a coming spurt of auction supply. The Treasury Department will sell
$30 billion of 3-year notes (3_YEAR) , $21 billion of 10-year
notes, and $13 billion of 30-year bonds.
Other high profile debt offerings this week include a sale of
roughly $3 billion in municipal bonds from junk-rated Puerto Rico,
which is circulating price talk on debt that it is selling to buy
time to shore up its struggling finances. The commonwealth's $70
billion in bonds, which dropped sharply in price last year, is held
in a wide range of municipal bond funds because of its exemption
from federal, state, and local taxes ((Read more about one fund
group that bet big on Puerto Rico
http://www.marketwatch.com/story/puerto-ricos-travails-hit-muni-bond-firm-that-bet-big-2014-03-04.)).
Corporate issuers in the market Monday include Verizon
Communications Inc. (VZ) , which is raising money to refinance debt
at lower interest rates, and Petroleo Brasileiro SA , a large
Brazilian issuer.
"Obviously it's a big chunk of supply right across the curve in
corporates, Treasurys and munis," said Thomas Roth, director of
government trading at Mitsubishi UFJ Securities U.S.A. Inc.
Despite the new supply, Treasury prices pushed slightly higher
Monday as stocks fell a bit amid renewed concerns about escalating
conflicts between Russia and Ukraine in the Crimean region.
"It's kind of the saber rattling from Ukraine putting pressure
on stocks and bid in Treasurys. We really haven't moved too much
from Friday's close," Roth said.
Interest rates are down since the start of the year as they took
their queue from soft economic data which most believe has been
obscured by particularly cold weather across much of the country.
However, a jobs report that beat economist expectations even amid
signs of weather-related slowdown in the labor force, sent yields
higher on Friday.
This week will be light on economic data. A report on retail
sales is due out on Thursday, and producer price index arrives
Friday ().
Federal Reserve Bank of Philadelphia President Charles Plosser
spoke Monday, suggesting that a pickup in the economy may force the
Federal Reserve to wind down its bond-buying stimulus program
faster than its current pace. The central bank is currently
withdrawing $10 billion from its asset purchase program at each
meeting.
A report by The Wall Street Journal's Jon Hilsenrath on Monday
suggests that the Fed is also thinking about the next leg of its
normalization of monetary policy. The central bank's current
thinking involves draining liquidity from the system by paying
interest on excess reserves to the banking system, as well as using
"reverse repos" to pay interest to those outside of the banking
system in return for lending the Fed cash.
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