NEW YORK: US Treasury prices rose on Wednesday after foreigners bid heavily for American debt during a government auction of $21 billion of benchmark 10-year notes.
Long maturities, the biggest beneficiaries from a widening of relative values against eurozone debt, again outperformed in late New York trading on Wednesday. The 30-year was last up 21/32 and yielding 2.6885 percent, compared with 2.843 percent at Friday's close.
After rallying on Monday and Tuesday, prices for U.S. government debt had been off moderately but began rising as the Treasury Department announced it had sold the 10-year notes at a yield of 2.139 percent and that total bids increased from a February auction.
Indirect bids, including ones by foreigners and foreign central banks, stood at 58.6 percent versus a norm of 50 percent, CRT Capital strategist Ian Lyngen told clients.
Mary Ann Hurley, fixed income trader at D.A. Davidson in Seattle, said the foreign bidding indicated "demand for our long dated paper because we yield so much more than the rest of the world."
On Wednesday, eurozone bond yields fell as the European Central Bank bought government debt across the currency union at a rate matching its 1.1 trillion-euro commitment over 1-1/2 years.
In contrast, yields on the benchmark 10-year note were last at 2.1103 percent, reflecting a price rise of 5/32, according to Thomson Reuters data. The comparable German bund yields nearly 2 percentage points less.
Investors expect interest rates to rise. The U.S. Federal Reserve meets next week, and may remove a phrase saying it plans on being "patient" with changes in policy as a precursor to shifting rates, possibly as soon as June.
Shorter-maturity Treasuries, which would be most affected by a Fed shift away from near-zero interest rates, were flat or up moderately in price.
"The short end of the curve - the two-year, the three-year, the five-year - is becoming more pensive about a sooner-than-expected rate hike," said Wilmer Stith, fixed income portfolio manager at Wilmington Trust in Baltimore. "There's a lot of volatility in the market, and we expect that to continue until the Fed acts."
Treasury officials were scheduled to hold a $13 billion sale of 30-year Treasury bonds on Thursday.
Comments
Comments are closed.