Treasuries fell for the first time in four days after Philadelphia Federal Reserve President Charles Plosser said the economy is on “firmer footing” and the central bank’s decision to cut debt purchases was a step in the right direction.
Yields rose earlier after a report showed retail sales gained in December more than forecast. The difference between yields on two- and 10-year debt widened as Plosser said the job market has performed better than expected even after data last week showed the U.S. economy added jobs at the slowest pace since January 2011. One-month bill yields were negative for a second day as Treasury reduces auction sizes.
“Another strong data point adds additional credence to the idea the monthly jobs report was an aberration,” said Dan Greenhaus, chief global strategist in New York at BTIG LLC. “While one number shouldn’t move the discussion in either direction, a strong retail sales report is much better than a weak one.”
Benchmark 10-year yields rose five basis points, or 0.05 percentage point, to 2.87% at 4:59 p.m. New York time, Bloomberg Bond Trader data show. The 2.75% note due November 2023 dropped 3/8, or $3.75 per $1,000 face amount, to 98 31/32. The yield declined to 2.82% yesterday, the lowest since Dec. 11.
Treasury trading volume at ICAP Plc, the largest inter- dealer broker of U.S. government debt, rose to $288 billion, from $265 billion yesterday. The 2013 average was $308 billion.
Investors in Treasuries were net long in the week ending yesterday, betting the prices of the securities will rise, according to a survey by JPMorgan Chase & Co.
The proportion of net longs was at 2 percentage points in the week ending yesterday, compared with a net short of 2 percentage points in the previous week, according to JPMorgan. The last time investors were net long was on Nov. 25.
The% of outright longs rose to 19%, from 13%, the survey reported. The% of outright shorts, or bets the securities will drop in value, rose to 17%, from 15% in the week ending Jan. 6, the survey said.
Investors cut neutral bets to 64% from 72%, resulting in the lowest level since Dec. 2, the survey reported.
Treasuries returned 1% this year, according to Bloomberg World Bond Indexes, after losing 3.4% last year. U.S. 10-year yields will rise to 3.43% by Dec. 31, according to the weighted average estimate of more than 60 forecasters surveyed by Bloomberg.