NEW YORK: US Treasuries prices rose on Thursday as a three-day rise in yields lured investors to buy government debt on the open market and a $13 billion auction of 30-year bonds, the final part of this week's $66 billion in longer-dated supply.
Data on the 30-year Treasuries auction suggested that the anticipated surge in US bond demand from Japanese banks, insurers and pension funds have yet to materialize.
The US bond market rallied last week after the Bank of Japan announced a bold $1.4 trillion asset purchase program aimed to stimulate its sluggish economy. The news sent Japanese government debt yields to record lows and fed bets Japanese investors will scramble for Treasuries and other higher-yielding foreign bonds.
Investors returned to US government debt on Thursday after a sell-off earlier this week drove yields higher, said Ian Lyngen, a senior government bond strategist at CRT Capital Group in Stamford, Connecticut.
The sell-off propelled longer-dated US yields from their lows of the year back to levels prior to last Friday's disappointing US government payroll report.
"Once we got back to the top of the yield range, at 1.81 in 10-years, a little bit of buying interest has emerged," Lyngen said.
Thursday's 30-year bond sale fetched lukewarm demand, although indirect bidders that include foreign central banks accounted for 31.44 percent of the purchases, the lowest in six months.
The overall bidding for the second reopening of the bond issue due in February 2043 came in at 2.49, up from 2.43 at the March auction but below its long-term average.
"We saw very little evidence of huge foreign buying at this auction and our analysis suggests it will occur over time rather than be extremely front-loaded," Aaron Kohli, interest rate strategist at BNP Paribas wrote in a note after the auction.
The lackluster auction briefly shaved bond market's gains in the afternoon before another bout of bargain-hunting emerged.
Benchmark 10-year Treasury notes last traded 4/32 higher to yield 1.790 percent, down 1.5 basis points from late on Wednesday.
The 30-year bond last traded 5/32 higher to yield 2.998 percent, down 0.7 basis points from Wednesday.
Earlier, Treasuries prices moved little on data showing the number of Americans filing new claims for unemployment benefits fell more than expected last week.
While analysts said seasonal factors such as Easter played a role, the figures could soothe some fears that the labor market recovery could be stumbling after weaker-than-expected payrolls figures last week pushed prices higher.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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