NEW YORK: US Treasury yields declined on Wednesday as quarter-end buying for portfolio rebalancing and safe-haven demand due to growing stock market losses pushed the benchmark 10-year yield to seven-week lows.
These factors overshadowed this week's record high $294 billion in government debt, to be completed Wednesday with sales of $15 billion in two-year floating-rate notes and $29 billion seven-year notes.
The $14.6 trillion bond sector, which investors now favor overs stocks, has produced a 0.68 percent total return in March for its strongest month since last August, according to an index compiled by Bloomberg and Barclays.
"We are seeing a strong bid this week, reflecting a flight-to-quality demand," said Bill Merz, head of fixed income research at US Bank Wealth Management in Minneapolis. "It's been exacerbated by short-covering."
Traders have exited short positions or bets on bond yields to rise this week as US stock prices fell on worries about a trade war between the United States and China and a scandal over political consultants accessing Facebook user data.
Speculators had heavy net short positions in Treasury futures with near record net shorts in five-year T-notes, according to data from the Commodity Futures Trading Commission released last Friday.
At 11:19 a.m. (1519 GMT), the yield on 10-year Treasury notes was down 3.5 basis points to 2.753 percent. It hit a seven-week low of 2.743 percent earlier.
The yield on five-year Treasury notes reached a six-week low of 2.540 percent earlier Wednesday. It was last down 2.8 basis points at 2.564 percent.
Wall Street's three major indexes were down for a second
day, on track for their biggest monthly loss since January 2016.
On the data front, the government revised up its reading on domestic economic growth in the fourth quarter to 1.9 percent from 2.5 percent. Analysts polled by Reuters had forecast an
adjustment up to 2.7 percent.