NEW YORK: US Treasury yields rose on Monday after falling for four straight sessions, as overall risk appetite improved and equity markets stabilized, with investors bracing for this week's slate of corporate supply and government debt auctions.
The $38 billion US three-year note auction showed fair demand on Monday, with the yield of 2.448 percent coming in slightly higher than that at the bid deadline.
The bid-to-cover ratio, an indication of demand, was 2.55, below the 2.66 average. Indirect bidders, however, which includes foreign central banks, took down 49.5 percent of supply, higher than the 45.7 percent takedown at the previous auction and the 46.4 percent average.
Investors typically sell Treasuries ahead of an auction to push the yield higher so they can buy them at a lower price.
"Rates are not going up much anytime soon," said Jim Caron, portfolio manager at Morgan Stanley Investment Management in New York. "I don't see a reason that this round of supply will be a problem."
After the three-year note, the Treasury is set to auction $24 billion in 10-year notes on Tuesday, and $16 billion in 30-year bonds on Wednesday.
On the corporate debt side, four US investment-grade deals were announced on Monday, led by BB&T Bank, natural gas company ONEOK, diversified holding company RELX Capital and Dominion Energy.
Ahead of corporate supply, bond managers tend to hedge against large interest rate moves by selling US government debt.
Overall, risk appetite has improved amid gains on Wall Street led by technology stocks, and that has weighed on Treasuries, said Gennadiy Goldberg, interest rates strategist at TD Securities in New York.
In afternoon trading, US 10-year note yields rose to 2.644 percent, up from 2.625 percent late on Friday.
US 30-year bond yields were also up at 3.033 percent , from 3.009 percent on Friday.
On the short end of the curve, US 2-year yields climbed as well to 2.479 percent, compared with Friday's 2.463 percent .
After Monday's auction, US three-year notes were at 2.452 percent, up from 2.433 percent on Friday.
Data showing US retail sales unexpectedly rising 0.2 percent in January had little impact on Treasuries, as it was offset by a downward revision in December sales to show a 1.6 percent drop instead of the previously reported 1.2 percent fall.
But, following a weak US nonfarm payrolls report on Friday, the retail sales data reinforced expectations the Federal Reserve will not raise interest rates at all this year, said Andrew Hunter, senior US economist at Capital Economics in London.
Comments
Comments are closed for this article.