NEW YORK: US Treasury debt prices edged higher on Wednesday after three days of selling, helped by lower risk appetite, with Wall Street shares trading weaker and overall caution ahead of a 10-year note auction later in the session.
Late on Tuesday, the World Bank trimmed its global growth forecast, saying a confluence of events, from the Ukraine crisis to unusually cold weather in the United States, dampened economic expansion in the first half of the year.
The news weighed on U.S. stock index futures earlier and helped bonds recover a little bit, partly offsetting selling ahead of the $21 billion U.S. 10-year note auction later on Wednesday. In general, however, there was little activity in the market until the 10-year note sale.
"I think investors are worried about the 10-year auction - where is demand going to come from," said Tom di Galoma, head of fixed income rates at ED&F Man in New York.
"We had auctions that tailed for the fist time - the 2s, 5s, and 7s all tailed two weeks ago. People are somewhat guarded that we may see a continuation of that trend of just a general lack of demand."
In midmorning trading, 10-year notes were up 4/32 in price to yield 2.622 percent, from 2.648 percent late on Tuesday.
Traders said that with the auction ahead, investors may push 10-year yields up to 2.7 percent
U.S. 30-year bonds rose 9/32 in price to yield 3.449 percent , from 3.481 percent late Tuesday.
Recent auction performance in the U.S. 10-year sector has been strong, driven by domestic investment funds. On a three-month moving average basis, their demand has increased since February to 48 percent. That has partially offset the decline in foreign investor participation since February.
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