US Treasury bond prices lower on deficit revision

Bond prices were lower and yields were higher in the US, as investors waited for several economic reports due out later in the week. In late morning trade in New York, 5-year bonds had gained 2.3 basis points to yield 4.924 percent, while 10-year bonds were up 2.5 basis points to a yield of 4.124 percent.

In an announcement expected to impact the government bond market, US deficit forecasts will be revised downward by the Office of Management and Budget on Wednesday. The revision is due to higher tax revenues.

Earlier forecasts were for a deficit of a record $427 billion in the current fiscal year, which ends in September. The deficit is now expected to be closer to $350 billion. The new expectations are being reflected in smaller Treasury auctions.

Meanwhile in Japan, prices on government bonds fell as the stock market rose. The 10-year Japanese government bond gained 0.5 basis points to a yield of 1.25 percent.

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