The sales this week are raising $25.5 billion of new cash, as maturing securities held by the public total $40.5 billion, according to the Treasury Department.
U.S. bonds fell earlier as the Labor Department reported that initial claims for unemployment benefits fell by 10,000 to 332,000 in the week ended March 9, the fewest since mid-January. A Bloomberg survey forecast an increase to 350,000.
“Any time you get a downward drift in claims, you’ll get Treasuries selling off,” said Steven Ricchiuto, chief economist in New York at the primary dealer Mizuho Securities USA Inc. “It’s pushed us back to the upper end of the yield range.”
Ten- and 30-year yields reached the highest levels in 11 months on March 8 after the Labor Department reported that U.S. payrolls increased by 236,000 jobs last month, more than forecast. Commerce Department figures yesterday showed U.S. retail sales jumped 1.1% in February from January, the biggest gain in five months.
Traders’ inflation expectations rose today. The yield gap between 10-year notes and Treasury Inflation Protected Securities, called the 10-year break-even rate, rose to 2.59 percentage points, the widest since Sept. 17 on a closing basis. The gap signals traders’ outlook for consumer prices over the life of the debt. It has averaged 2.35 over the past year.
The Fed purchased $3.34 billion today of Treasuries maturing from May 2020 to February 2023. It is buying $85 billion of Treasury and mortgage debt a month to spur the economy by putting downward pressure on borrowing costs.
Treasury securities due in a decade and more traded at almost the cheapest level since 2011 relative to global peers with comparable maturities, according to the Bank of America indexes. Yields on Treasuries were 54 basis points higher on March 8 than those in an index of other sovereign debt, the most since August 2011, the data showed. The spread was 53 basis points yesterday.