By Min Zeng
The U.S. Treasury bond market started the holiday-shortened week
slightly lower ahead of the government's final round of bond
auctions for the year.
In recent trading, the yield on the benchmark 10-year note was
2.179%, compared with 2.178% Friday, according to Tradeweb. Bond
yields move inversely to their prices.
A $27 billion sale of two-year Treasury notes is due at 1 p.m.
EST Monday, the first leg of this week's $104 billion new Treasury
debt offerings maturing from two years to seven years.
Traders expect trading volume in the bond market to decline
during the last two weeks of December, known as the winter holiday
trading period. Many investors are taking time off and the lower
liquidity may exaggerate bond price swings, said traders.
The Treasury bond market is on pace to wrap up a strong year.
The 10-year note's price has surged this year, sending the yield
down from 3% at the start of January.
Treasury bonds overall have handed investors a total
return--including price changes and interest payments--of 4.91%
this year through Friday, the biggest calendar-year return since
2011, according to data from Barclays PLC.
Treasury bonds suffered a 2.75% loss in 2013 as worried over the
prospect of reduced bond buying from the Federal Reserve sent
investors piling out of the market.
Leading into 2014, many investors and market analysts had
expected the bond market to extend last year's selloff. They
believe a strengthening U.S. economy and reduced stimulus from the
central bank would continue to sap demand for ultrasafe Treasury
debt.
But the bond market has proved them wrong.
Demand for U.S. government securities has climbed due to weaker
growth overseas, tumbling oil prices and market stress in some
emerging-market countries.
In addition, the U.S. government bond market has offered more
attractive yields compared with government bonds in Germany, Japan,
the U.K., France and Canada. A rising dollar driven by the prospect
of higher interest rates from the Fed has enabled foreign buyers to
pick up extra returns.
"Foreign investors have and will continue to find Treasurys
attractive for their safety, liquidity, and strength of currency,"
said Kevin Giddis, head of fixed income at Raymond James in
Memphis, Tenn.
On Monday, the yield on the 10-year German government bond was
0.599% and the yield on the 10-year Japanese government bond was
0.335%.
Write to Min Zeng at min.zeng@wsj.com
Access Investor Kit for Barclays Plc
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=GB0031348658
Access Investor Kit for Barclays Plc
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US06738E2046