Bond Prices Fall As Ukraine Crisis Calms

U.S. Treasury debt prices fell on Thursday as fears over a war in Ukraine abated, helping drive benchmark yields to their highest levels in a week, and as traders prepared for Friday's key non-farm payrolls report.

Markets await the results from a referendum vote due in 10 days that will decide whether Crimea will become a part of Russia.

"The big story today was a continuation of the easing tensions between the Ukraine and Russia, a reasonable bid in the equities market and somewhat unfriendly data for bonds," said Ian Lyngen, a senior government bond strategist at CRT Capital in Stamford, Connecticut.

The number of Americans filing new claims for unemployment benefits hit a three-month low last week, a sign of strength in a labor market that has been hobbled by severe weather. That sent yields to a session high of 2.7410 percent.

Bonds traded in a sideways range as investors awaited the non-farm payroll report for February. Wednesday's weak private employment data and a severe winter have clouded predictions for the report, said Steve Van Order, a fixed income strategist with Calvert Investments in Bethesda, Maryland.

"You could have almost anything come out tomorrow," said Van Order

Losses were capped by the European Central Bank's decision to leave interest rates unchanged, holding its nerve in the face of uncomfortably low inflation.

Ten-year notes were last down 12/32 in price, pulling yields up to 2.739 percent after Wednesday's close of 2.696 percent. Thirty-year bonds fell 24/32, sending yields to 3.685 percent from Wednesday's close of 3.644 percent.

Traders see 10-year note yields finding support at 2.75 percent, the 100-day moving average and resistance at the 2.60 percent.

The Federal Reserve bought $1.23 billion in debt due from 2039 to 2043.

The Treasury will sell $64 billion in three-year, 10-year and 30-year government debt next week.

(By Marina Lopes)