NEW YORK - U.S. Treasuries prices rebounded from a two-day selloff on Wednesday after late-stage debt negotiations between Greece and its international creditors hit a roadblock, crimping optimism for a deal and driving demand for safe-haven U.S. bonds.
Greece 's international lenders demanded that it improve proposed tax and reform measures in a last-minute race to clinch a deal to unlock aid and avert a debt default next week. Sources close to the negotiations said the creditors had presented counter-proposals to Athens to overcome differences.
"We are getting to the point where it's do or die, take it or leave it, and I think what you're seeing today is that there's growing fear that this thing is not going to come together," said Justin Hoogendoorn , fixed income strategist at BMO Capital Markets in Chicago .
Yields on benchmark 10-year Treasury notes and 30-year bonds, which move inversely to prices, slipped from respective one-and-a-half-week highs of 2.43 percent and 3.22 percent hit Tuesday. Analysts said lingering optimism for a Greek debt deal limited the price gains and prevented yields from falling below recent ranges.
"The market is subject to the Greek story at this point, and as the different iterations continue to come out, the market is responding accordingly," said Ian Lyngen , senior government bond strategist at CRT in Stamford , Connecticut .
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Traders awaited the Treasury's auction of $35 billion in five-year notes at 1 p.m. ET (1700 GMT). The sale, which will mark the second round of this week's $90 billion in new supply, should meet with solid demand given quarter-end buying and uncertainty over the Greek debt talks, CRT's Lyngen said.
The Commerce Department said on Wednesday gross domestic product fell at a 0.2 percent annual rate in the January-March quarter instead of the 0.7 percent pace of contraction it reported last month, but analysts said the Greek debt talks overshadowed the data.
U.S. 30-year Treasuries were last up 21/32 in price to yield 3.17 percent, from a yield of 3.20 percent late Tuesday. Benchmark 10-year notes were last up 5/32 to yield 2.39 percent, from a yield of 2.41 percent.
Five-year notes were last up 1/32 to yield 1.69 percent, roughly unchanged from late Tuesday's yield.
On Wall Street, U.S. stocks opened lowered after the setback in Greek debt talks, with the benchmark S&P 500 index last down 0.15 percent.
