Prices steady to lower ahead of new US debt supply
The Treasury will sell $72 billion in new debt this week: $32 billion in three-year notes on Tuesday, $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday. While that new supply may weigh on prices, large buybacks by the Federal Reserve are expected to temper weakness.
"The market needs to digest the supply that is coming this week," said Sean Simko, portfolio manager at SEI Investments in Oaks, Pennsylvania.
But analysts said markets will likely stay range bound. "The big picture hasn't changed, there are still the ongoing issues of slow growth and uncertainty," said Simko. "Until we really start seeing headlines that are changing the bigger picture we're going to stay in this range."
Benchmark 10-year Treasuries were off 4/32 to yield 1.964 percent. Analysts say the notes are stuck in a range from around 1.90 percent to 2.04 percent.
The Fed bought $1.45 billion in long-dated debt due from 2036 to 2042 on Monday and plans further long-dated purchases this week as well as buybacks in the 10-year sector and five-year sector.
Attention is also expected to focus on Obama's State of the Union address on Tuesday, which will be watched for any signs that lawmakers are likely to
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