Treasuries held onto losses from yesterday as talks between German Chancellor
Angela Merkel and French President
Nicolas Sarkozy raised optimism the European Union will help Greece avoid a default.
Government securities fell initially in Asian trading after a spokesman for the German chancellor said Merkel and Sarkozy had reached a joint position to solve Greece’s debt crisis before a summit of European leaders today. The U.S. is scheduled to sell $13 billion of 10-year Inflation Protected Securities today and will announce the sizes of three note sales set for next week.
“The improving situation in
Europe will hurt the Treasury market,” said Sungjin Park, who helps oversee the equivalent of $58.8 billion as head of the fixed-income division in Seoul at Samsung Asset Management Co.,
South Korea’s largest private bond investor. “It will encourage growth in the global economy.”
Ten-year yields rose one basis point to 2.94 percent as of 12:52 p.m. in
Tokyo, according to Bloomberg Bond Trader prices. The 3.125 percent note due in May 2021 dropped 3/32, or 94 cents per $1,000 face amount, to 101 18/32. The rate is still less than the 10-year average of 4.06 percent.
The benchmark yield will climb to 3.28 percent by the end of September, according to a Bloomberg survey of banks and securities companies with the most recent forecasts given the heaviest weightings. Park forecasts 3.2 percent.
Brussels’ Summit
Details of the Merkel, Sarkozy agreement will be released today when euro region leaders meet in Brussels, the governments said in a statement after seven hours of talks in Berlin.
Greece is struggling to pay its debts, while investors concerned at borrowing levels in Italy and Spain sent bond yields in those nations to euro-area records this week.
Treasuries trimmed losses after President Barack Obama’s administration signaled it may accept a short-term increase in the federal borrowing limit, raising optimism the government is making progress in averting a default.