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Markets

US long-dated prices rise as markets digest debt supply

A day after its maiden sale in more than three decades, US 20-year bonds traded at 1.165pc, from 1.187pc on Wednesd
21 May 2020
  • A day after its maiden sale in more than three decades, US 20-year bonds traded at 1.165pc, from 1.187pc on Wednesday.
  • Yields on US 30-year bonds were at 1.390pc, down from 1.398pc on Friday.
  • The yield curve flattened on Thursday, with the spread between the 10-year and two-year narrowing to 50 basis points.

NEW YORK: US long-dated Treasury prices rose on Thursday, as investors were relieved that the flood of debt supply from the government to finance various stimulus programs during the pandemic has been absorbed in the market fairly smoothly.

That said, the front-end of the curve has been under mild pressure ahead of the US Treasury's announcement on auction sizes for two-year, five-year, and seven-year notes, as well as the sale of $12 billion in reopened 10-year TIPS.

"There's a little bit of relief that we got through the sale of the 10-year, 20-year, and 30-year," said Justin Lederer, Treasury analyst, at Cantor Fitzgerald in New York.

"The supply, with additional bills, notes, bonds, has all been well-received overall even though the Federal Reserve has trimmed its purchases."

Wednesday's auction of $20 billion in US 20-year bonds, the first such sale since 1986, was considered a success even though the yield came just a little higher than market expectations at the bid deadline.

Analysts also said bonds were also well-bid as global equities fell amid growing tension between the United States and China on the origin of the novel coronavirus.

US Secretary of State Mike Pompeo rejected on Wednesday President Xi Jinping's claim that Beijing had acted with transparency after the outbreak in China, and said if Xi wanted to show that, he should hold a news conference and allow reporters to ask him anything they liked.

In morning trading, US 10-year yields was at 0.678pc from 0.679pc late on Wednesday.

A day after its maiden sale in more than three decades, US 20-year bonds traded at 1.165pc, from 1.187pc on Wednesday.

Yields on US 30-year bonds were at 1.390pc, down from 1.398pc on Friday.

The yield curve flattened on Thursday, with the spread between the 10-year and two-year narrowing to 50 basis points.