Benchmark US Treasury yields hit their lowest levels in over a month on Wednesday, while long-dated yields hit more than one-month lows for a second straight day on weaker-than-expected US economic data and continued low yields in Europe. A disappointing batch of US data underpinned the bid for safe-haven Treasuries. Analysts said the data gave the US Federal Reserve more reason to keep interest rates low and that the impact was pronounced given low volumes ahead of the US Thanksgiving holiday on Thursday.
"(The data) reinforces that view that the Fed won't be tightening anytime soon," said David Coard, head of fixed income sales and trading at Williams Capital Group in New York. The Commerce Department said consumer spending increased 0.2 percent last month, while non-defence capital goods orders, excluding aircraft, declined 1.3 percent. The results were below economists' expectations, according to Reuters polls.
The Labour Department said US jobless claims rose to 313,000 for the latest week, above expectations according to a Reuters poll, while home sales and consumer sentiment data also disappointed. Benchmark 10-year yields fell to 2.2289 percent, their lowest since October 23, while 30-year yields fell to 2.9369 percent, their lowest since October 21. Eurozone bond yields hovered near record lows after the European Central Bank's vice president said it might decide in the first quarter of next year whether to begin buying sovereign bonds.
"The comments are getting stronger that they want to do additional quantitative easing," said Sean Murphy, a Treasuries trader at Societe Generale in New York. He said investors viewed higher US yields as a value play. The Treasury sold $29 billion in new seven-year notes. Overall bidding, as measured by the bid-to-cover ratio, was 2.63, the strongest since February. Analysts said month-end buying supported bidding. Benchmark 10-year US Treasury notes were last up 7/32 to yield 2.24 percent, from a yield of 2.26 percent late Tuesday. US 30-year bond yields were last up 14/32 to yield 2.94 percent, from a yield of 2.97 percent late Tuesday.