Azernews.Az

By Bloomberg

Short-dated Treasuries fell before a $26 billion auction of two-year debt, with a report that economists said will show growth in U.S. services giving investors cause to question the allure of the securities.

The decline in two-year notes was the first in three days. Monday’s auction will be the first of a combined $105 billion of sales of coupon-bearing securities due between two and seven years scheduled for this week. While Federal Reserve officials have sent conflicting signals on when they may raise interest rates, the world’s largest economy is set for its fastest growth in 10 years, based on economists’ predictions compiled by Bloomberg.

Yields on Treasury two-year notes rose two basis points, or 0.02 percentage point, to 0.53 percent as of 9:28 a.m. London time, according to Bloomberg Bond Trader data. The 0.5 percent note due in March 2017 fell 1/32, or 31 cents per $1,000 face amount, to 99 31/32. Benchmark 10-year yields were little changed at 1.92 percent.

The two-year notes scheduled to be sold Monday yielded 0.55 percent in pre-auction trading, down from 0.598 percent at a previous auction on March 24. That compares with an average 1.76 percent in the past decade.

Markit Economics will say on Monday that its Purchasing Managers’ Index for U.S. services was at 58.8 in April, according to the median prediction of economists surveyed by Bloomberg. While that’s lower than March’s reading, it’s still above the above the 50 level that indicates expansion.