Bonds ease ahead of auction
Investors eye sale of $118 billion of notes this week as rising markets in the U.S. and around the world dent safe-haven appeal.
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| Click chart to see current prices and yields. |
NEW YORK (Reuters) -- Treasury debt prices eased Monday, with investors preparing for another huge dose of supply this week and as higher stocks sapped the safe-haven appeal of government debt.
Stocks were boosted in part by a weaker dollar and suggestions from a Federal Reserve official that fiscal stimulus should be maintained beyond what was originally planned.
St. Louis Fed President James Bullard said Sunday night that the central bank should keep alive its mortgage-related asset purchase program beyond a planned end date.
"Stocks are up globally, fueled by positive data and policy comments suggesting that stimulus will remain in place," said T.J. Marta, chief market strategist with Marta on the Markets LLC in Scotch Plains, N.J. He added that "in keeping with the generally positive attitude, government bond yields have risen."
Investors were also looking to cheaper Treasurys ahead of the sale of $118 billion of notes this week. The auctions will kick off Monday afternoon with the sale of $44 billion of two-year paper.
Ahead of the sale, benchmark 10-year Treasury notes were trading 5/32 lower in price to yield 3.39%, up from 3.37% late Friday, while 30-year bonds were 12/32 lower to yield 4.32%, from 4.30%.
The bearish tone in Treasurys was fueled by data showing existing home sales rose in October to the highest in more than 2-1/2 years. Sales surged a record 10.1% to an annual rate of 6.10 million units from a 5.54 million unit pace in September. Analysts polled by Reuters had been looking for sales to rise to 5.70 million in October.
"The data is consistent with the theme that the economy is recovering and that the housing market has hit bottom," said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco.
Two-year Treasury notes were trading unchanged in price to yield 0.74%.
The price action Monday steepened the yield curve, with the spread between yields on two-year notes and 10-year notes widening to 265 basis points from 263 basis points late Friday. 
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