Bonds slide on earnings, supply worries

Government debt prices retreat on strong earnings and profit taking from yesterday's rally.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)

Click the chart to view other bond prices and yields.
Who will benefit most from the Obama administration's proposed financial regulations?
  • Consumers
  • Banks
  • Regulators

NEW YORK (Reuters) -- U.S. Treasury prices slid on Wednesday, as solid earnings reports and the shadow of next week's supply prompted investors to take profits from the previous day's gains.

Tuesday's price gains were prompted by Federal Reserve Chairman Ben Bernanke, who signaled a period of economic weakness and low interest rates but also quelled inflation fears.

"It's just a matter of some positions being unwound and some profit-taking," said Rick Klingman, managing director of Treasury trading at BNP Paribas in New York. "With stocks somewhat stable today, we gave back some of yesterday's rally," he said.

Benchmark 10-year Treasury prices were last seen lower by 18/32 to yield 3.55%, up from Tuesday's closing yield of 3.48%. Thirty-year bonds fell a full point to yield 4.45 %, compared with the previous day's close of 4.39%.

Stocks were helped but bonds were hindered by better-than-expected earnings reports from such companies as Apple (AAPL, Fortune 500), Caterpillar (CAT, Fortune 500) and Intel (INTC, Fortune 500).

"You're seeing good earnings come out -- you have flow to the better side of economic growth, or at least not as drastic a downturn as people feared," said Bill Schultz, chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania.

"It's an economic outlook that is less ominous than it was two weeks ago, and that makes people less inclined to chase the safety of government bonds," Schultz said.

This does not bode well for next week's debt sales. The Treasury department may auction up to $113 billion in new debt next week, according to William O'Donnell, chief U.S. Treasury strategist at RBS Securities.

The Treasury is expected to issue $2 trillion in new debt this year. Demand at previous auctions has been robust, despite some concerns that the market's appetite for Treasurys will soon be sated.

Supply anxiety is part of the source of today's losses, said Klingman, and "the market could probably back up a little more" so auctioned bonds will sell for a lower price.

"The dealers would probably like to see higher levels to buy bonds into," said Schultz, "but if earnings continue at this pace, you will probably see a further pullback on the bond side as we get more evidence that things weren't as bad as people feared." To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Copyright 2009 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.