NEW YORK, Oct 25 (Reuters) – U.S. Treasuries prices rallied on Tuesday as doubts over whether Europe could commit enough resources to arrest the region’s deepening debt crisis revived the bid for safe-haven U.S. government debt.

The euro zone was on edge on the eve of a summit meant to confront the currency bloc’s worsening sovereign debt crisis. Disputes raged in Rome and Berlin over details of a plan to reduce Greece’s debt burden, fortify European banks to withstand bond losses and boost the euro zone rescue fund to prevent market contagion.

The consequent popularity of safe-haven U.S. debt fortified the bid in an auction of $35 billion in two-year Treasury notes, where non-dealer bidders grabbed 47.4 percent of the sale. That topped the 45 percent norm, said Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut.

The value of bids offered exceeded the amount accepted by a 3.64 ratio, more than the average 3.36 ratio of the four most recent auctions and the average 3.21 ratio so far this year.

Given that the Federal Reserve will sell as much as $18 billion of securities maturing in 2013 and 2014 this week, “this auction went quite well,” said Jefferies & Co money market economist Thomas Simons.

After the sale, the market traded “extremely well,” said Cantor, Fitzgerald interest-rate strategist Justin Lederer.

In late trade, benchmark 10-year Treasury notes were up 1-1/32 in price, their yields falling to 2.12 percent from 2.23 percent late on Monday.

NEW YORK, Oct 24 (Reuters) – U.S. Treasuries prices edged lower on Monday as a stock market rally drew investors away from safe-haven U.S. government debt and traders trimmed prices before three Treasury note auctions this week.

Global stocks hit a seven-week high and commodities prices rose as European leaders took steps to resolve the region’s debt crisis. A manufacturing rebound in China eased fears of a sharp slowdown for the world’s second-largest economy.

“I wouldn’t say that risk is completely back on, but the world did seem a little safer today as Europe moved closer to the final act and U.S. stocks made a new high since the volatility in early August,” said Chris Rupkey, managing director and chief financial economist at Bank of Tokyo/Mitsubishi UFJ in New York.

Euro zone leaders made progress toward a strategy to stem the region’s debt crisis on Sunday, nearing agreement on bank recapitalization and on how to leverage the European Financial Stability Facility — a 440 billion euro bailout fund. But final decisions were deferred until a second summit in Brussels on Wednesday, and sharp differences remain over the size of losses private holders of Greek government bonds will have to accept.

Modest price-cutting among short- and intermediate-term Treasuries prepared the way for the Treasury’s auctions of two-, five- and seven-year notes this week.

“Staring down the barrel of three straight days of auctions, dealers would much rather see yields go up to increase demand for supply later in the week,” Rupkey said.

The imminent supply of two-year notes allowed the difference in yields between two- and 10-year notes to widen by two basis points, according to TradeWeb data.

NEW YORK/LONDON, Oct 18 (Reuters) – A key measure of counterparty risk crept higher on Tuesday even as markets hoped a European Union summit on Sunday would do something to relieve year-end financial stresses in money markets.

The outline of a plan to leverage the euro zone rescue fund was taking shape and there were expectations that any crisis plan would include efforts to recapitalise banks and reduce Greece’s debt mountain.

Citing senior European Union diplomats, Britain’s Guardian newspaper said on Tuesday that France and Germany had agreed to boost a euro zone financial rescue fund to two trillion euros ($2.76 trillion) as part of a plan to resolve the bloc’s debt crisis that should win support at Sunday’s EU crisis summit.

The report said the euro zone would endorse a five-fold increase in the 440-billion-euro bailout fund, giving it some two trillion euros to help troubled governments and banks withstand the impact in the event a troubled country defaults.

A senior euro zone source, however, told Reuters there had been no mention of such a deal.

Markets have feared European leaders would not agree on a comprehensive plan to address the crisis, which has already forced Greece, Ireland and Portugal to seek bailouts and has driven up borrowing costs in Italy and Spain.

European banks with heavy exposure to troubled sovereign debt have also found it harder to fund operations, sparking fear governments may have to bail them out.

NEW YORK/LONDON, Oct 17 (Reuters) – Demand for safe-haven short-term U.S. debt eased and some measures of market strain held steady on Monday, though bank-to-bank lending rates rose as Germany damped hopes that Europe would soon reach a comprehensive solution to its debt crisis.

The Group of 20 major had economies pressured euro zone leaders over the weekend to move to act decisively to address the crisis at a European Union summit on Oct. 23.. However, Germany’s finance minister, Wolfgang Schaeuble, tempered the expectations on Monday.

Analysts said market price action was being driven by short-term speculation about the proximity, and likelihood, of an agreement on key elements of a rescue package, including a recapitalization of the region’s banks.

Still, safe-haven demand for short-term U.S. Treasury debt cooled in two auctions the Treasury conducted on Monday.

The U.S. Treasury sold $29 billion in three-month bills at the highest yield in two months and six-month U.S. Treasury bills at the highest yield since early September.

With short-term interest rates held near zero by the U.S. Federal Reserve’s pledge to keep short rates near zero at least until mid-2013, Monday’s three-month bill auction stopped at 3 basis points, still the “highest” yield in two months.

Another sign of less heated demand for the shorter-term U.S. debt was the 4.17 ratio of bids received over those accepted, down from a record 5.15 a week earlier.

NEWYORK/LONDON, Oct 14 (Reuters) – Money market stress is expected to ease in coming weeks after the European Central Bank offers banks one-year cash, a move that has eased funding concerns and let overnight rates stabilize at lower levels.

The ECB will offer banks 12-month funds on Oct. 26 and again in December after already sparse interbank lending markets dried up again on worries over financial institutions’ exposure to sovereign debt.

“Interbank lending was starting to seize up and we’re already starting to see some of that pressure ease,” said James Dailey, chief investment officer of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

The one-year tenders will be pure liquidity additions that could result in 400 billion or 500 billion euros of excess by the end of the period, said RBS rate strategist Simon Peck.

That compares to around 230 billion euros currently. The abundance has let banks front-load their reserve requirements by around 120 billion euros, the largest amount since May 2010, according to Reuters data, while overnight deposits at the ECB are over 120 billion euros.

In general, markets have reacted positively to “growing signs that political policy makers are waking up to the task confronting them,” said Cary Leahey, managing director and senior economist at Decision Economics in New York.

The spread between benchmark three-month Libor rates and equivalent maturity overnight rates has shrunk to around 65 basis points compared with 80 basis points in September.

NEW YORK, Sept 27 (Reuters) – The U.S. Treasury sold $30 billion in four-week bills at zero percent interest on Tuesday while overseas, euro zone bank demand for European Central Bank loans remained robust.

Dealers bid aggressively for the U.S. four-week Treasury bills, anticipating they could= easily sell them in a setting where investors prize safety and liquidity.

Meanwhile, euro zone bank demand for ECB loans was expected to stay strong at upcoming emergency tenders as banks build cash buffers in case the euro zone debt crisis worsened.

“The trouble is the crisis keeps burning, sometimes more rapidly than others, but it’s smoldering all the time,” said Pierre Ellis, senior economist at Decision Economics in New York.

In Germany, talk of proposals to leverage the 440 billion euro bailout fund to multiply Europe’s financial firepower lifted global stocks.

The Bundestag (lower house) =is expected to approve a widening of the scope of the European Financial Stability Facility to aid weak states and banks, a strategy approved by European leaders in July. [ID:nL5E7KR2MH] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

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NEW YORK, Sept 27 (Reuters) – The U.S. Treasury sold $30 billion in four-week bills on Tuesday as dealers bid aggressively for the instruments, anticipating they could easily sell them.

Indirect bidders got 20.8 percent of the sale, the smallest portion since the August 30 four-week bill auction. Direct bidders took 6.1 percent of the bills, in line with the past three weeks. But dealers captured 73.1 percent, their largest share of an auction since August 30.

“As yields in the sector have hit zero or below, dealers have been more aggressive in the auctions, bidding for larger shares,” said Thomas Simons, money market economist at Jefferies & Co. in New York.

“Since the minimum bid is zero and trading inside of four weeks has gone into negative territory several times in the past month, dealers view the downside risk to ownership as limited,” he said.

Short-term bill rates have traded with yields near zero because of the Federal Reserve’s pledge to keep short-term interest rates near zero until at least mid-2013.

The value of the bids the Treasury received for the bills eclipsed the amount of bids accepted by a 5.53 ratio.

“The bid cover ratio was the lowest of the past three weeks, but ranked as the fifth highest on record,” said Thomas Simons, money market economist and vice-president, fixed-income in Jefferies & Co.

NEW YORK (Reuters) – Treasuries prices slidlosses on Friday in choppy trade driven by volatile trading in riskier assets, particularly stocks.

After a big rally this week, traders were ready to take some profits but not to go short, traders said.

“Short is still not an option,” said John Briggs, interest-rate strategist at RBS Securities in Stamford, Connecticut. “Look to take profits and slim down long, directional flattening positions, while remaining in 10s30s flatteners.”

Prices of safe-haven U.S. government debt moved in close collusion with stocks, moving lower when stocks turned higher.

“The key to the bond market today is whether stocks will stabilize,” said Thomas Roth, director, U.S. government bond trading at Mitsubishi UFJ Securities in New York.

Major stock indexes rose in early trade, then turned lower, then trimmed some of those losses.

At mid-morning, benchmark U.S. 10-year notes were down 9/32 in price, their yields rising to 1.76 percent from 1.72 percent on Thursday.

NEW YORK (Reuters) – Long-dated U.S. government debt rallied strongly on Thursday, extending the previous day’s rally on a Federal Reserve plan to invest $400 billion in long-term Treasury securities.

In a plan designed to cut the cost of mortgages, corporate bonds, and other kinds of credit, the Fed will buy long-term federal debt over the next nine months, raising money for the purchases by selling holdings of short-term debt.

The strategy of buying longer-dated Treasuries at the expense of shorter ones pushed the price of 10- and 30-year Treasuries securities sharply higher, shrinking the difference between short- and long-term yields.

Benchmark 10-year notes rose a point, their yields falling to 1.76 percent from 1.87 percent late on Wednesday.

The 30-year bond climbed 3-4/32, its yield falling to 2.84 percent – the lowest since January 2009 – from 2.99 percent late on Wednesday.

The difference between 2- and 10-year yields stood at 157 basis points on Thursday, down sharply from 204 basis points a month ago when markets gradually began to anticipate further monetary easing.

“The Fed is buying a lot more long bonds than we thought,” said Steve Van Order, fixed income strategist with Bethesda, Md.-based Calvert Investment Management Inc, which has more than $14.5 billion in assets under management.

NEW YORK (Reuters) – Treasury debt prices held steady on Wednesday as markets waited for an afternoon statement from the Federal Reserve, one expected to indicate the central bank would rebalance its portfolio in favor of longer-dated securities to keep long-term interest rates low.

Fresh developments in the European debt crisis seemed to be neutral for safe-haven U.S. government debt. Greece is expected to outline more austerity measures to get a loan it needs to avoid a cash crunch next month, but anti-austerity strikes by Greek workers are called for October 5 and 19.

Anticipation of a Fed decision to ease monetary policy further has made investors extremely reluctant to sell Treasuries, at least ahead of the announcement.

In early dealings, benchmark 10-year Treasury notes were unchanged, yielding 1.94 percent.

Should the Fed’s announcement be less aggressive than the market anticipates, some selling could ensue, traders said.

The Fed could gradually weight its portfolio toward longer-dated securities in two ways: by buying longer-dated bonds with proceeds from maturing securities or by more actively selling short-dated notes to buy longer-dated bonds.

The Fed could also offer more policy guidance on the fed funds rate or the size of Fed’s balance sheet, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities.