Rome: Treasuries fell, extending last week's decline, as Italy unveiled an austerity plan to cut the euro-region's second-biggest debt and economists said a report yesterday would have shown US service industries have expanded.
Longer-maturity bonds led losses as German Chancellor Angela Merkel and French President Nicolas Sarkozy prepared to meet before a European Union summit in Brussels this week. European stocks and US equity futures rose amid optimism the manufacturing report will signal the world's largest economy will avoid slipping into another recession.
"We are seeing more risk appetite" and that is pushing down Treasuries, said Ralf Umlauf, head of floor research at Helaba Landesbank Hessen-Thueringen in Frankfurt. "The incoming data from the services sector is crucial for market sentiment, whether it's risk on or off. Treasury yields should move up a little bit today."
Ten-year yields climbed five basis points, or 0.05 percentage point, to 2.08 per cent at 10:10am London time, according to Bloomberg Bond Trader prices, after rising seven basis points last week. The 2 per cent note due in November 2021 fell 13/32, or $4.06 per $1,000 face amount, to 99 9/32. Thirty-year yields climbed six basis points to 3.08 per cent.
Italy's Prime Minister Mario Monti was to present yesterday to both houses of parliament a plan for €30 billion of austerity and growth measures approved by his cabinet on Sunday.
European leaders are scheduled to meet on December 9 to address the region's debt crisis after the failure of their fourth rescue blueprint intensified concern the 17-nation euro is on the brink of unravelling.
Italian bonds rose, narrowing the extra yield investors get for holding the nation's securities instead of German bunds to as little as 4.06 percentage points, the least since October 31. The euro strengthened 0.4 per cent to $1.3448.
The Stoxx Europe 600 Index gained for a second day, rising 0.7 per cent, and futures on the Standard & Poor's 500 Index expiring this month advanced 1.1 per cent.
The Institute for Supply Management's US non-manufacturing index climbed to 53.8 last month, the highest since May, according to a Bloomberg News survey. Service industries expanded at the fastest pace in six months, a separate survey showed. The nation's jobless rate declined to 8.6 per cent, the least since March 2009, the Labour Department said on Friday.
