Treasuries declined, pushing 10-year note yields up to a one-month high, before the U.S. auctions $61 billion of notes and bonds during three days starting tomorrow.
Low volatility across financial markets may signal investors are underestimating increases in interest rates, according to the Federal Reserve Bank of San Francisco. U.S. government debt rose earlier as investors sought a haven following a poll showing most voters in Scotland want independence. U.S. government securities are heading for their biggest annual advance since 2011, supported by demand for the safest securities because of unrest in Ukraine and the Mideast.
“We have supply coming up at a time when there isn’t really anything else to drive us, and so we are seeing the market prepare to have to digest new debt, which is weighing on Treasuries,” said Larry Milstein, managing director in New York of government-debt trading at R.W. Pressprich & Co. “The yield differentials still favor the U.S. against Europe, which should attract foreign interest.”
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