TREASURIES-Yields rise as corporate debt sales weigh
(Recasts with corporate debt sales, adds quotes, details,
updates prices)
* Large corporate debt sales weigh on bonds
* Friday's employment data for February in focus
* Investors evaluate data for indications of rate increase
By Karen Brettell
NEW YORK, March 2 (Reuters) - U.S. Treasury yields rose on
Monday as large sales of corporate debt pressured prices and as
investors continued to question whether the Federal Reserve is
likely to raise interest rates in the coming months.
Pharmaceutical company Actavis (NYSE: ACT - news) on Monday was
marketing bonds that are expected to total $22 billion, the
second largest amount ever sold by a corporate borrower.
"Corporate deals are weighing on the market, and we've heard
of some allocation out of bonds into equities," said Sean
Murphy, a Treasuries trader at Societe Generale (Paris: FR0000130809 - news) in New York.
Some companies are likely trying to sell debt before the
Federal Reserve begins raising interest rates, which some expect
may begin in June.
"A lot of guys are looking at what is going on with the Fed
and trying to figure out whether or not the rate rise is going
to be any time soon, and looking to get some deals out before
any of that transpires," Murphy said.
Benchmark 10-year Treasuries were last down
25/32 in price to yield 2.08 percent, the highest since February
24.
Some investors and analysts expect that the Fed will drop
the word "patient" in its forward guidance at this month's
meeting, held on March 17-18, paving the way for a possible rate
rise in June. The Fed said in December that it will be patient
in raising rates, replacing its former pledge to keep rates near
zero for a "considerable time."
The main focus for the market this week will be Friday's
employment report for February. Employers are expected to have
added 240,000 jobs in the month, according to the median
estimate of 100 economists polled by Reuters.
"It's going to be on payrolls' shoulders to show the market
that things aren't slowing down that much," said Gennadiy
Goldberg, an interest rate strategist at TD Securities in New (KOSDAQ: 160550.KQ - news)
York.
"If you have a weaker payroll print and underperformance in
wage growth that could have serious implications for whether the
word 'patient' is removed at the March meeting, and that could
lead to very considerable repricing for Fed hikes," Goldberg
said.
Expectations that the Federal Reserve could hike rates by
mid-year rose in February after a strong U.S. employment report
for January and stronger core consumer prices data, helping the
bonds post their biggest monthly loss since May 2013.
(Editing by Diane Craft)