By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 22 U.S. long-dated Treasury debt
yields rose from two-week lows on Wednesday, after French
centrist presidential candidate Francois Bayrou pulled out of
the elections in France and offered an alliance with independent
candidate Emmanuel Macron.
This meant that Macron together with Bayrou's support will
have a better chance of defeating leading far-right presidential
candidate Marine Le Pen, who has vowed to lead France out of the
European Union, analysts said.
Yields on German Bund bonds and U.S. Treasuries rose on the
news since there was less of a search for safety given the
perception of Le Pen's reduced chances at winning the
presidency, said Lou Brien, a market strategist at DRW Trading
"That latest development should be enough to push Macron
back into the second place of the first round, or maybe even the
first place," he added.
U.S. Treasuries have been sensitive of late to global
developments such as the French elections, whose first round is
in April. Increased prospects of a Le Pen victory have tended to
weigh on yields on German, French and British bonds and
sometimes have a knock-on effect on Treasuries.
In morning trade, U.S. 10-year notes were last
flat in price to yield 2.429 percent. But 10-year yields have
recovered most of their losses. They fell as low as 2.391
percent, their weakest level since Feb. 9.
U.S. 30-year bond prices were down 3/32,
yielding 3.043 percent, up from Tuesday's 3.037 percent. Yields
earlier dropped to 2.999 percent, their lowest in two weeks.
In the United States, investors are looking to the release of
the latest Federal Reserve minutes for clues about the timing of
the next interest rate hike.
Fed Chair Janet Yellen said last week that a rate increase
would be considered at every policy meeting, leading people to
speculate that the next would be in March.
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Sam Forgione Editing by W Simon)