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June 30, 2015 at 05:20 AM
(Bloomberg) — Haven demand sparked by the crisis in Greece isn’t proving enough to prevent Treasuries from heading for their first quarterly loss since 2013, as yields climb with the Federal Reserve poised to raise interest rates this year.
U.S. sovereign securities fell, extending June’s decline, a day after rising the most since 2013 as Greek Prime Minister Alexis Tsipras unexpectedly abandoned talks with creditors. Treasuries are set to fall for a third month as a rebound in the world’s biggest economy from a winter freeze buoys prospects for the Fed to increase borrowing costs as soon as September.
“Most people appreciate that the U.S. economic data is very good,” said David Keeble, the New York-based head of fixed-income strategy at Credit Agricole SA. “Had Greece been put on the sidelines, we may have had a hike in June.”
The Bloomberg U.S. Treasury Bond Index has declined 1.8 percent since March 31, set for its first quarterly loss since the last three months of 2013. It has fallen 0.8 percent in June through Monday, the worst monthly performance since February.
The benchmark Treasury 10-year yield rose three basis points, or 0.03 percentage point, to 2.35 percent as of 8:34 a.m. New York time, according to Bloomberg Bond Trader data. The 2.125 percent note due in May 2025 fell 1/4, or $2.50 per $1,000 face amount, to 97 31/32. The yield slid 15 basis points on Monday, the biggest one-day decline since September 2013.
Volatility climbs
As Treasuries dropped this quarter, market volatility has jumped since Tsipras called a referendum for July 5 on the austerity measures demanded by creditors. Greece is on course to withhold a $1.7 billion payment to the International Monetary Fund due Tuesday.
