US Treasury yields rose on Monday, as risk appetite improved after the Federal Bureau of Investigation cleared Democratic presidential candidate Hillary Clinton of any wrongdoing in the use of a private email server. US long-dated yields, which move inversely to prices, trended lower over the past week after the FBI said it was looking at another large batch of Clinton's emails, narrowing her lead in the polls over Republican presidential contender Donald Trump.
But the FBI late on Sunday said it stood by its earlier finding that no criminal charges were warranted against Clinton for using a private email server for government work, prompting a selloff in Treasuries ahead of the US election. The US presidential election will be held on Tuesday.
"We have this big jump in risk appetite after the FBI basically cleared Clinton from indictment with regard to the email scandal," said Kim Rupert, managing director of global fixed income at Action Economics in San Francisco. "It's a fairly obvious trade. It is interesting to see though how it proceeds in the future, what the election says in terms of Congress." Clinton is associated with higher risk appetite because she is a "known quantity," said Gennadiy Goldberg, interest rates strategist, at TD Securities in New York.
In late trading, benchmark US 10-year Treasury note yields were down 11/32 in price to yield 1.824 percent, up from Friday's 1.783 percent. US 30-year bond prices fell 17/32, yielding 2.598 percent, up from 2.57 percent last Friday. Two-year note yields, which are most sensitive to interest rate changes, were at 0.817 percent, up from Friday's 0.793 percent. Supply is also a focus this week aside from the US election.
Treasury's $78 billion bill auction was lacklustre, but had decent indirect demand. The 3-month issue had a high yield of 0.420 percent versus 0.405 percent at the bid deadline. Indirect bids totalled 33 percent, double last week's 15.2 percent, according to Action Economics.
The $36 billion 6-month bill's high yield, meanwhile, was O.535 percent, unchanged from the bid deadline. There were $122.3 billion in bids for a 3.41 cover, a little below last week's 3.48, said Action Economics. Indirect bidders accepted 50.9 percent, up from 43.4 percent previously. On tap for Tuesday, meanwhile, is the $24 billion US three-year note auction.