(Bloomberg) — Treasuries are trading in the narrowest range this month as an improving U.S. economy and the potential for Greece missing a debt repayment pull investors in opposing directions.
Benchmark 10-year yields have swung between 2.36 percent and 2.44 percent since Tuesday as Greece failed to reach an agreement with creditors. In the U.S., data on housing and consumer spending have boosted the case for the Federal Reserve to raise interest rates as early as September. Greece's creditors on Friday proposed a five-month program extension and funding to resolve the standoff.
"Unless you think Greece is going to become systemic, that is the only way you can justify not paying attention to broad-based positive economic activity," said Tom Porcelli, chief U.S. economist in New York at Royal Bank of Canada's RBC Capital Markets unit, one of 22 primary dealers that trade with the Fed. "I don't think anyone thinks that."
The benchmark Treasury 10-year yield rose three basis points, or 0.03 percentage point, to 2.43 percent as of 8:32 a.m. New York time, according to Bloomberg Bond Trader data. The yield has increased 18 basis points this week. The price of the 2.125 percent note due in May 2025 fell 6/32, or $1.88 per $1,000 face value, to 97 10/32.
Treasuries have alternated between gains and losses since June 23. They fell on Thursday after a report showed consumer spending rose the most in almost six years in May. That followed the biggest gains in at least six years in new and existing home sales.
Watching data
"For fixed-income markets globally it is difficult to establish new momentum with Greece still up in the air," said Michael Leister, a senior rates strategist at Commerzbank AG in Frankfurt. "Beyond Greece, we have very important U.S. data next week, the nonfarm payrolls, which will determine the market's take on the Fed liftoff."
