Treasuries were little changed amid speculation the Federal Reserve won’t signal a change next week in its program of $85 billion a month in bond purchases.
Benchmark 10-year notes fluctuated as a measure of July consumer confidence exceeded forecasts. U.S. debt is poised to end two weeks of gains after the U.S. sold $99 billion of securities over the previous three days, including seven-year debt at the highest yield since July 2011. Analysts predict data next week will show American home prices rose at the fastest pace in seven years in May and the unemployment rate dropped this month.
“We might be seeing a little risk-off sentiment in here,” said Ian Lyngen, a government bond strategist at CRT Capital Group LLC in Stamford, Connecticut. “There’s a lot of event risk here and there’s no compelling reason to sell the market.”
The U.S. 10-year note yields were little changed at 2.57% at 10:51 a.m. in New York, according to Bloomberg Bond Trader data. The price of 1.75% note maturing in May 2023 was at 92 29/32. The yield has increased nine basis points this week.
Treasuries handed investors a loss of 0.2% since the end of June, with the securities poised for a third monthly decline, the Bloomberg U.S. Treasury Bond Index shows. The MSCI World Index of shares has returned 5.9% in July, including reinvested dividends.
The Thomson Reuters/University of Michigan final index of U.S. consumer sentiment increased to 85.1 in July from 84.1 the prior month. The median forecast in a Bloomberg survey called for 84 in the final July gauge after a preliminary reading of 83.9.
The S&P/Case-Shiller index of U.S. home prices rose 12.4% in May from a year earlier, which would be the biggest gain since February 2006, a separate Bloomberg survey showed before the report on July 30. The U.S. jobless rate fell to 7.5% in July from 7.6% in June, while payrolls climbed by 184,000, according to economists before the Labor Department releases the figures on Aug. 2.
“Even if the headline payroll gain is near consensus, the market is not accounting for the risk of a sudden drop in the unemployment rate,” Barclays Plc strategists led by Rajiv Setia in New York, wrote in a research note. “Investors should brace themselves for the likelihood of a further selloff.”
Yield on 10-year notes are likely to climb faster than those on 30-year bonds, the analysts forecast.