NEW YORK: US Treasury prices gained on Thursday after the Treasury Department's $12 billion bond sale drew strong demand, and as investors repositioned ahead of inflation data due on Friday.
The 30-year bonds sold at yields just below pre-auction levels, and the bid-to-cover ratio was 2.53, the highest since September 2015.
"It went well," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. "There was demand out the curve, after the recent selloff rates have stabilized."
Demand was also solid for Treasury's $24 billion in three-year notes and $20 billion in 10-year notes on Wednesday.
Bids were supported by news from the United States Geological Survey (USGS) on Thursday about an event with "earthquake like characteristics" in an area in North Korea where there had previously been nuclear tests, but that the USGS could not determine if it was natural or man-made.
Benchmark 10-year notes gained 5/32 in price to yield 2.327 percent, down from 2.345 percent on Wednesday.
Traders shifted focus to consumer price data due on Friday for further indications of whether inflation is picking up.
The Labor Department said on Thursday its producer price index for final demand increased 0.4 percent in September. In the 12 months through September, the PPI jumped 2.6 percent, the biggest gain since February 2012.
"PPI was a little bit better, but that doesn't really translate well to CPI," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. "I think for the most part markets are still waiting for the CPI report tomorrow."
Ten-year yields jumped to 2.402 percent on Friday, the highest level since May 11, after the government's employment report for September showed a rise in wages that boosted expectations for rising inflation.
Analysts, however, have said that data was muddied by recent hurricanes. Adverse weather is seen as having impeded lower-income workers from getting to work more than it did higher-income workers.
Minutes from the Federal Reserve's September meeting released on Wednesday showed that Fed policymakers had a prolonged debate about the prospects of a pickup in inflation and the path of future interest rate rises if it did not.
Comments
Comments are closed for this article.