Treasuries Head for Biggest Weekly Drop

Treasuries fell while the dollar slipped as investors exited haven assets following gains in tech stocks.

A test of bond demand will come when the Treasury sells $70 billion in new five-year notes in New York following a solid two-year offering.

US 10-year yields rose two basis points to 4.05%, while the greenback lagged most major peers, along with the yen.

The increased appetite for risk led money markets to trim wagers on Federal Reserve interest-rate cuts, adding pressure to the bond market, James Hirai reported for Bloomberg News.

“With 10-year Treasury yields so close to the 4% psychological level, I see better value in fading any bid if it emerges,” said Evelyne Gomez-Liechti, a strategist at Mizuho International Plc.

Swaps tied to Fed policy meeting dates have reduced the probability of a quarter-point cut by June to 50%, the lowest level so far this year.

The likelihood of a third rate cut by year-end has nearly vanished.

Traders will watch a trio of Fed policymakers scheduled to speak later Wednesday. Thomas Barkin, Jeffrey Schmid, and Alberto Musalem — all of whom are considered slightly hawkish — are non-voters this year.

A test of bond demand will come when the Treasury sells $70 billion in new five-year notes in New York following a solid two-year offering.