* Strong U.S. economic data boosts Treasury yields
* Positive data from China, Europe helps global yields
* 'Rate-locking' activities also weigh on Treasury prices
* U.S. 30-year yields fall to four-week low
(Updates prices, adds comment)
By Gertrude Chavez-Dreyfuss
NEW YORK, Jan 3 U.S. Treasury debt yields were
mostly higher on Tuesday after three days of losses, supported
by positive U.S. data and upbeat economic reports from China and
Bond prices, which move inversely to yields, trimmed losses
however, as U.S. stocks and oil pared gains. U.S. 30-year bond
yields, which are particularly sensitive to oil-driven inflation
expectations, fell to four-week lows as a result.
"Treasuries have benefited from stocks and oil coming off
their early highs," said Lou Brien, markets strategist at DRW
Trading in Chicago.
Reports that Libya will further increase crude production
triggered the decline in oil prices, with a stronger dollar also
weighing. A strong dollar makes commodities such as oil, which
are priced in the greenback, more expensive to holders of other
The fall in oil prices triggered some selling in stocks,
pulling them from earlier highs.
Treasury prices were still mostly lower overall following
strong U.S. manufacturing and construction spending data.
Chinese numbers showing the economy's fastest factory output
growth in six years along with firmer German and French
inflation figures also provided a broad boost to global yields.
"Global yields in general are higher as data overall has
been relatively positive," said Gennadiy Goldberg, interest
rates strategist, at TD Securities in New York.
He also said Treasury prices fell partly due to
"rate-locking" activities in which Wall Street dealers lock in
borrowing costs for corporate bonds they are underwriting.
January is historically a month with a heavy corporate issuance
calendar, as investors look to put money to work and issuers
launch their funding plans for the year.
According to TD, January has accounted for about 11 percent
of issuance for the year, with March, September and November as
the other heavy supply months.
As part of underwriting, a dealer sells Treasuries as a
hedge to lock in the borrowing cost on the bond issue before the
deal is completed. Once the bond is sold, the dealer buys back
Treasuries to exit the rate lock.
Typically, market moves stemming from supply hedging are
temporary and not indicative of market sentiment.
In late trading, the U.S. 10-year note was down
4/32 in price to yield 2.446 percent, compared with 2.432
percent late on Friday.
U.S. 30-year bond prices were up 4/32, yielding 3.044
percent, down from Friday's 3.051 percent.
U.S. two-year note prices were down 1/32, with a yield of
1.218 percent, compared with 1.198 percent on Friday.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu
Nomiyama and Meredith Mazzilli)