By Min Zeng
Treasury bonds pulled back on Monday, giving back an earlier
price rally, as investors believe the fallout from Sunday's
national elections in Greece will be contained.
Looming fresh new U.S. government bond sales also weigh down
bond prices. Trading was thinner than usual as investors and
traders brace for a potentially historic blizzard across the
Northeast.
In recent trade, the yield on the benchmark 10-year Treasury
note was 1.821%, compared with 1.814% on Friday, according to
Tradeweb.
Bond prices fall as their yields rise.
Investors had piled into ultrasafe U.S. government bonds,
sending the 10-year yield down to 1.75% during earlier global
trade, following the victory of the leftist Syriza party in
Greece's elections.
Syriza has advocated for renegotiation with international
creditors over harsh terms on the financial bailout during the
eurozone's sovereign debt crisis in 2010-12.
But the bond market rally gradually tapered off as the euro
rebounded from an earlier selloff against the dollar. Investors
believe the ultra-loose monetary stimulus from the European Central
Bank will keep contagion risk in check. The ECB announced last
Thursday that it will start buying bonds--including government debt
in the eurozone--in March.
"It is not believed at this point that we will see a contagion
spreading to some of the other" weaker economies in the eurozone,
and the haven flows into Treasury bonds dialed back, said Larry
Milstein, head of government and agency trading at R.W. Pressprich
& Co. in New York.
Analysts say this time it is different compared with 2012, when
worries over Greece potentially departing the eurozone caused
global market turmoil. The ECB has stepped in with bold actions to
curb the risk of a breakup of the monetary union.
Yields in the eurozone's government bond markets tumbled to
record lows at the end of last week after the ECB released its
bond-buying plan.
"Time changed the game," said Guy LeBas, chief fixed-income
strategist at Janney Montgomery Scott in Philadelphia. "In 2011,
the markets weren't confident in the degree of bank exposure to
Greece, for example. Now, financial institutions have had more than
three years to make sure they're not exposed. The ECB gets credit
for an assist."
The coming blizzard is an immediate concern for investors and
traders, and many set up contingent plans for Tuesday amid concerns
that commuting could be disrupted.
Brian Edmonds, head of interest rates at Cantor Fitzgerald LP in
New York, said he plans to leave early Monday afternoon and to work
from home in Connecticut on Tuesday.
"Half of our trading desk lives in Manhattan so the plan is for
them to get into the office [Tuesday] when those living outside
Manhattan work remotely at home," he said. "I have a power
generator at home. Hopefully things will start clearing up
Wednesday."
The Securities Industry and Financial Markets Association said
Monday that it is not recommending an early close for U.S. bond
markets for Monday. SIFMA is the largest trade group representing
U.S. banks, securities firms and asset management companies.
The Treasury said Monday it is reshuffling this week's new debt
offerings ahead of the blizzard.
A $26 billion sale of two-year notes now will be conducted on
Wednesday, instead of its original Tuesday schedule. A $35 billion
sale of five-year notes will be up on Thursday, instead of
Wednesday.
A $15 billion sale of two-year floating-rate notes is also moved
to Wednesday from Tuesday.
A $29 billion sale of seven-year notes will be conducted
Thursday as scheduled.
Write to Min Zeng at min.zeng@wsj.com