Treasuries Pare Losses From Data as Investors Aim to Rebalance

(Bloomberg) -- Treasuries rebounded, recovering from the largest intraday decline since the Federal Reserve raised interest rates last month, as plunging crude oil prices spurred demand for haven assets and investors looked to rebalance to start 2017.

U.S. 10-year yields were little changed at about 2.45 percent at 3:43 p.m. in New York. They climbed as much as seven basis points, the most since Dec. 14, after data released Tuesday from the Institute for Supply Management showed American manufacturing expanded in December at the fastest pace in two years. Yields reversed course as crude oil futures whipsawed.

Yields remained higher across most European debt, including in Germany, France and the U.K., after data Tuesday showed the pace of German inflation more than doubled in December. Figures last week showed inflation in Spain rose at the fastest pace since 2013.

• U.S. 30-year yields fell 2 basis points to about 3.05 percent; benchmark two-year yield climbed 3 basis points to 1.22 percent
  • Yield curve from five to 30 years flattened to about 110 basis points; faces pressure from expected surge in corporate issuance in coming days
• The yield on Germany’s 10-year bunds rose as high as 0.29 percent, touching the highest since Dec. 19
• U.S. dollar investment-grade issuance slate included six financial names, also underpinned Treasuries as deals were announced throughout morning session
• Treasury note auctions resume next week; strong demand for sales of five- and seven-year notes last week
• U.S. economic calendar this week includes Dec. 14 Federal Open Market Committee minutes and December employment report

--With assistance from Anooja Debnath To contact the reporters on this story: Brian Chappatta in New York at bchappatta1@bloomberg.net, Edward Bolingbroke in New York at ebolingbrok1@bloomberg.net. To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net, Mark Tannenbaum