The benchmark Treasury 10-year yield rose three basis points, or 0.03 percentage point, to 2.43 percent.

(Bloomberg) — Treasuries are trading in the narrowest range this month as an improving U.S. economy and the potential for Greece missing a debt repayment pull investors in opposing directions.

Benchmark 10-year yields have swung between 2.36 percent and 2.44 percent since Tuesday as Greece failed to reach an agreement with creditors. In the U.S., data on housing and consumer spending have boosted the case for the Federal Reserve to raise interest rates as early as September. Greece’s creditors on Friday proposed a five-month program extension and funding to resolve the standoff.

“Unless you think Greece is going to become systemic, that is the only way you can justify not paying attention to broad-based positive economic activity,” said Tom Porcelli, chief U.S. economist in New York at Royal Bank of Canada’s RBC Capital Markets unit, one of 22 primary dealers that trade with the Fed. “I don’t think anyone thinks that.”

The benchmark Treasury 10-year yield rose three basis points, or 0.03 percentage point, to 2.43 percent as of 8:32 a.m. New York time, according to Bloomberg Bond Trader data. The yield has increased 18 basis points this week. The price of the 2.125 percent note due in May 2025 fell 6/32, or $1.88 per $1,000 face value, to 97 10/32.

Treasuries have alternated between gains and losses since June 23. They fell on Thursday after a report showed consumer spending rose the most in almost six years in May. That followed the biggest gains in at least six years in new and existing home sales.

Watching data

“For fixed-income markets globally it is difficult to establish new momentum with Greece still up in the air,” said Michael Leister, a senior rates strategist at Commerzbank AG in Frankfurt. “Beyond Greece, we have very important U.S. data next week, the nonfarm payrolls, which will determine the market’s take on the Fed liftoff.”

The Labor Department will say U.S. employers added 227,000 jobs in June, according to the median forecast of economists in a Bloomberg survey before the data are released on July 2.

Fed policy makers have stressed the timing of the first interest-rate increase since 2006 will depend on data, which a Bloomberg gauge shows are the strongest relative to economist estimates in almost four months.

Bloomberg’s U.S. economic surprise index, which measures the extent to which the data is above or below analyst estimates, rose to minus 0.52 on Thursday, the highest level since March 2. It was at minus 0.87 on May 1, the least since March 2009.

Greek standoff

There’s 38 percent chance the Fed will increase its benchmark rate from near zero by September, and a 73 percent probability of an increase by December, according to futures data compiled by Bloomberg.

Greek talks remain deadlocked with only days remaining before the country’s current bailout expires on June 30, when a 1.5 billion-euro ($1.7 billion) payment is due to the International Monetary Fund. This has kept Treasuries shackled in a tight range.

“Very few investors out there really want to take positions in this market,” according to Commerzbank’s Leister. “We have passed so many deadlines where we thought we would have clarity on Greece, but we didn’t get any.”

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