Treasuries fell after the U.S. auctioned $13 billion of 30-year bonds amid signs the world’s biggest economy is gathering strength.
Losses were tempered as yields at almost 11-month highs attracted buyers. The sale drew a yield of 3.248%, the highest since March 2012, compared with an average forecast of 3.243% in a Bloomberg News survey of seven of the Federal Reserve’s 21 primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of debt offered, was 2.43, the lowest since August, versus 2.74 last month. Treasuries fell earlier as U.S. jobless claims unexpectedly dropped, fueling risk appetite.
“There was less demand in general after yesterday’s pretty strong auction, as we are still in somewhat of a bearish environment,” said Paul Horrmann, a broker in New York at Tradition Asiel Securities Inc., an interdealer broker. “That said, we could be set up for a rally given these higher yields and how oversold the market.”
The yield on benchmark 30-year bonds increased two basis points, or 0.02 percentage point, to 3.24% at 3:07 p.m. in New York, according to Bloomberg Bond Trader Prices. It touched 3.26% today after reaching 3.28% on March 8, the highest level since April 5.
Ten-year note yields rose one basis point to 2.03% and reached 2.07%. They touched 2.08% on March 8, the highest since April.
Foreign Banks
Indirect bidders, an investor class that includes foreign central banks, purchased 42% of the bonds sold today, compared with 36.4% at the Feb. 14 bond sale and an average of 35.8% for the past 10 offerings.
Direct bidders, non-primary-dealer investors that place their bids directly with the Treasury, purchased 4.9%, the least since September 2009, versus 14.5% at the previous sale and an average of 15.8% for the past 10.
Primary dealers bought 53.1% of the securities, the most since October.
Thirty-year bonds have lost 5.1% this year, compared with a 1% decline in the broader U.S. Treasuries market, according to Bank of America Merrill Lynch indexes.
The U.S. sold $21 billion of 10-year debt yesterday at a yield of 2.029%, compared with a forecast of 2.057% in a Bloomberg News survey of eight primary dealers. The government auctioned $32 billion of three-year notes on March 12 at a yield of 0.411%, below the 0.413% average forecast in a Bloomberg survey.