Treasuries headed for their steepest weekly loss in almost two months as stocks gained around the world, eroding demand for the safety of debt.
Ten-year yields were about one basis point away from the highest level in two weeks as Toyota Motor Corp. said it plans to resume production of some models in Japan, after an earthquake and tsunami idled plants for two weeks. U.S. Secretary of State Hillary Clinton said the NATO alliance will take responsibility for enforcing a no-fly zone over Libya.
“There’s an unwinding of the flight to quality,” said Yusuke Tanaka, senior dealer at Mitsubishi UFJ Trust & Banking Corp. in Singapore, part of Japan’s largest bank. “The worst will be avoided in Japan and the Middle East.”
Ten-year yields were little changed at 3.40 percent as of 9:42 a.m. in Tokyo, according to Bloomberg Bond Trader. The price of the 3.625 percent note maturing in February 2021 was 101 7/8.
The rate has climbed 13 basis points this week, the most since the seven days ended Feb. 4. It rose to 3.41 percent yesterday, the most since March 14.
The MSCI All Country World Index of stocks gained for six days through yesterday, advancing to a two-week high.
“There is a general sense that there has been a shift in attitude after the raw emotion of the flight-to-quality trade, which seems to have dissipated,” said Kevin Flanagan, a Purchase, New York-based fixed-income strategist at Morgan Stanley Smith Barney. “Investors are moving back into risk and out of Treasuries some.”
Demand for inflation-protected notes rose at an auction yesterday.
The notes drew a yield of 0.92 percent, compared with the average forecast of 0.981 percent in a Bloomberg News survey of 9 of the 20 primary dealers, those companies that are obliged to participate in U.S. government auctions.
Investors bid for 2.97 times the amount of debt, the highest level since April 2010.
To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net
To contact the editor responsible for this story: Nicholas Reynolds at nreynolds2@bloomberg.net
From www.bloomberg.com