By William Watts, MarketWatch
Treasurys gained a little ground Tuesday, recovering somewhat from a postelection rout and allowing yields to retreat.
The yield on the 10-year Treasury note fell 1.6 basis points to 2.319%. Yields and debt prices move in opposite directions.
The iShares 20-plus Year Treasury Bond exchange-traded fund (TLT) ended little changed. The ETF, among the most widely used by investors to gain exposure to Treasurys, is down 7.7% in the month to date, clinging to a 0.4% rise since the end of 2016.
Yields accelerated a rise after Donald Trump's presidential election victory on Nov. 8, with investors dumping bonds on expectations the incoming administration would run larger deficits, boosting the supply of bonds and raising prospects for growth and inflation. The yield on the 10-year note last week hit its highest level since December.
"Given the extent of U.S. Treasury losses since Trump's election victory, we expect a short-term pause or correction, even as markets still discount too few rate hikes for 2017-18," wrote analysts at KBC Bank in Brussels.
Traders might be inclined to take profit on some short bets on Treasurys in a holiday-shortened week, they said. The market is closed Thursday for the Thanksgiving Day holiday and is set for an early close Friday.
See: Here's when markets close on Black Friday (http://www.marketwatch.com/story/heres-when-markets-close-on-black-friday-2016-11-18)
Yields remained higher after data showed existing home sales neared a 10-year high in October (http://www.marketwatch.com/story/existing-home-sales-roar-to-a-near-10-year-high-in-october-as-demand-defies-headwinds-2016-11-22).
The Federal Reserve is seen as virtually assured by market participants to raise rates at its final policy meeting of the year next month. But traders are factoring in only one or two more hikes over the next nine months.
See:100% probability of a December hike, Fed funds futures contracts show (http://www.marketwatch.com/story/100-probability-of-a-december-hike-fed-funds-futures-contracts-show-2016-11-22)
Treasurys remained under pressure at the short end of the yield curve, which continues to scale back some of the steepening that accompanied the postelection selloff. The curve is a line drawn between short- to long-term debt. When the differentials widen, the curve is said to steepen. When they narrow, it is said to flatten.
The Treasury sold $34 billion of five-year Treasury notes , attracting average demand.
The yield on the two-year Treasury rose 1.1 basis points to 1.095%, while, at the long end, the 30-year Treasury bond yield declined marginally to 3.006%.
(END) Dow Jones Newswires
November 22, 2016 17:14 ET (22:14 GMT)
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