Treasury 10-year note yields traded close to the highest since April on speculation Federal Reserve minutes may provide details on when the central bank plans to start trimming debt purchases.
Benchmark notes fell for a third day as a report showed builders broke ground in January on the most U.S. single-family homes in more than four years and permits for future construction rose, an indication the industry’s momentum carried over into 2013. Investors demanded the biggest yield premium in 11 months to buy notes in the U.S. instead of Japan. The difference between 10-year yields in the two nations widened to 1.30 percentage points, the most since March 20.
“The Fed minutes is certainly the primary driver,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “We’re looking for the Fed to talk a little bit more about the downsides of their very expansionary monetary policy. The short-term data will take second seat to the Fed.”
The U.S. 10-year yield climbed one basis point, or 0.01 percentage point, to 2.04 percent at 8:32 a.m. New York time, according to Bloomberg Bond Trader prices. The 2 percent note due in February 2023 fell 3/32, or 94 cents per $1,000 face amount, to 99 21/32. The yield reached as much as 2.05 percent. It climbed to 2.06 percent on Feb. 14, the highest level since April 10.
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