NEW YORK: The US Treasury Department on Tuesday sold $24 billion of three-year notes to the weakest overall demand since July 2009, even though the yield offered was higher than at the three-year supply auctioned in February, according to Treasury data.
The three-year note sale was part of this week's $56 billion in coupon-bearing Treasury supply. It will sell $20 billion in 10-year notes on Wednesday and $12 billion in 30-year bonds on Thursday.
The ratio of bids to the amount of three-year debt offered was 2.71, below 2.74 at February's auction and the lowest since July 2009 when this gauge of auction demand was 2.62.
The yield on the latest three-year Treasury issue cleared at 1.039 percent, slightly higher than traders had expected. In February, the three-year supply fetched a yield of 0.844 percent, which was the lowest since March 2014.
The three-year Treasury yield had reached its highest level in more than a month on Monday as a solid payrolls report last week reduced worries about a U.S. recession and revived bets the Federal Reserve may raise interest rates more than once in 2016.
"Perhaps the yield pickup in the front-end offers is just not enough to compensate for the risk of a more hawkish Fed," BMO Capital Markets interest rate strategist Aaron Kohli wrote in a research note.
Small bond dealers and other direct bidders purchased 9.05 percent of the three-year issue, down from 14.98 percent in February and their smallest share since September 2015.
Foreign central banks, fund managers and other indirect bidders bought 46.02 percent, greater than previous auction's 41.48 percent which was the smallest since November.
Primary dealers or the top 22 Wall Street firms that do business directly with the Federal Reserve purchased 44.74 percent, up from 43.54 percent in February and their biggest share since December 2014.
The Fed did not bid for this three-year note issue.
Earlier Tuesday, the Treasury Department sold a record $60 billion of one-month bills at an interest rate of 0.275 percent with a bid-to-cover ratio of 3.44.
A week earlier, it sold $55 billion of one-month T-bills at an interest rate of 0.295 percent and a bid-to-cover ratio of 3.29.
Comments
Comments are closed for this article.