NEW YORK: US Treasuries market sagged on Wednesday with benchmark yields hitting their highest in six weeks in a global bond sell-off as investors awaited possible clues on an interest rate increase from the US Federal Reserve.
Traders blamed the dumping of Treasuries, German Bunds and British Gilts on a combination of factors including less gloomy economic figures on Europe, a failed five-year German debt auction and hefty US bond supply this week.
US yields briefly retreated on data showing the US economy grew a paltry 0.2 percent in the first quarter, below an already subpar 1.0 percent increase forecast by economists.
"We breached the upper end of the trading range. People are looking to unload some longs," said Sean Murphy, a Treasuries trader at Societe Generale in New York.
The market sell-off quickly resumed as traders brushed off the disappointing report as the government cited another harsh winter and other factors for the poor growth.
The yield on benchmark 10-year Treasuries notes was 2.048 percent, up 7.3 basis points from late on Tuesday. It touched its highest level in six weeks at 2.081 percent.
The 30-year bond yield rose 9 basis points at 2.759 percent after hitting a seven-week high at 2.792 percent.
US yields broke above the top end of the trading range set after the Fed's policy meeting in March, when it downgraded its economic outlook and view on the pace of future rate hikes.
Interest rates futures implied traders expect the possible first meeting where the Fed might raise rates is December.
The Federal Open Market Committee was scheduled to release a statement at 2 p.m. (1800 GMT) after a two-day meeting.
Before that, the Treasury Department was slated to sell $15 billion in two-year floating-rate notes (FRN) at 11:30 a.m. (1530 GMT) and $29 billion in seven-year fixed-rate securities at 1 p.m. (1700 GMT).
Activity in the higher-yielding corporate bond sector has been brisk with nearly $22 billion in high-grade debt already sold on Monday and Tuesday, according to IFR, a Thomson Reuters unit.
On the other hand, the latest German five-year government debt sale "failed" as the total bids for the Bobl issue came in below the amount offered.
German 10-year Bund yield hit 0.278 percent, the highest in six weeks, while British 10-year Gilt yield jumped to its highest in seven weeks at 1.835 percent.
Comments
Comments are closed.