NEW YORK — Treasuries fell, pushing 10-year yields to a six-week high, as investors weighed reports that talks are progressing on a budget deal in Washington that would head off a recession in the world’s biggest economy.
U.S. one-month bill rates fell below zero for a second day. The government sold $35 billion of two-year debt to lower-than- average demand. The offering’s bid-to-cover ratio, which gauges demand by comparing total bids with the amount offered, fell to 3.59, the least since February, after matching a record-high 4.07 last month. The Treasury will auction $35 billion in five year notes tomorrow in the second of four sales this week totaling $113 billion.
“I’m surprised by the magnitude of the move in Treasury yields today,” said Ian Lyngen, a government-bond strategist at CRT Capital Group in Stamford, Conn. “There’s more optimism that we’re closer to a fiscal-cliff deal of some sort.”
The 10-year note yield climbed seven basis points, or 0.07 percentage point, to 1.77 percent, at 4:33 p.m. in New York, according to Bloomberg Bond Trader prices. It touched 1.78 percent, the highest level since Nov. 2, surpassing its 200-day moving average of 1.75 percent. The price of the 1.625 percent security maturing in November 2022 dropped 5/8, or $6.25 per $1,000 face amount, to 98 21/32.
Thirty-year bond yields rose eight basis points to 2.95 percent, also the highest since Nov. 2, and the yield on the current two-year note increased two basis point to 0.25 percent.
Treasuries have returned 2.3 percent this year, set for the worst performance since a 3.7 percent decline in 2009, a Bank of America Merrill Lynch index shows.