Treasurys Gain as Investors Confront Auctions

U.S. government bond prices climbed Thursday, reflecting steady demand for ultrasafe debt ahead of a $19 billion auction of 30-year Treasury bonds.

In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 0.622%, according to Tradeweb, compared with 0.652% Wednesday.

Yields, which fall when bond prices rise, held steady overnight but dropped after U.S. stock indexes flipped from early gains to losses.

Earlier, Treasurys registered little reaction to the release of initial unemployment claims, which fell to 1.3 million last week from 1.4 million the previous week.

In recent months, economic data has repeatedly beat analysts' expectations, helping buoy riskier assets like stocks even as confirmed coronavirus cases in the U.S. have climbed again. Demand for Treasurys, however, has also remained strong, reflecting both doubts about the economic recovery and confidence that the Federal Reserve will continue to buy Treasurys and keep short-term interest rates near zero.

Underscoring investors' appetite for longer-term Treasurys, the Treasury Department sold $29 billion of 10-year notes Wednesday at a record low yield of 0.653%. Traders put in bids for 2.62 times the amount of bonds that were sold - - a big increase from the 2.26 ratio for last month's 10-year note auction, according to Jefferies LLC.

Thursday's auction of 30-year bonds will pose another test for the market.

Some investors worry that longer-term yields are bound to rise soon based on the improving economic data and deluge of new debt entering the market from both the government and the corporate sector.

Another strong auction, however, "could spur buying in all fixed income sectors if investors decide waiting for Treasury supply to raise all interest rates might not be the best plan," Jim Vogel, interest-rates strategist at FHN Financial, wrote in a morning note to clients.

The yield on the 30-year bond was recently 1.345% after closing at 1.391% Wednesday.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

By Sam Goldfarb

U.S. government bond prices climbed Thursday, reflecting strong demand for ultrasafe debt after a $19 billion auction of 30-year Treasury bonds.

In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 0.600%, according to Tradeweb, compared with 0.652% Wednesday.

Yields, which fall when bond prices rise, held steady overnight. But they dropped when U.S. stock indexes started to fall and added to declines after the auction.

Earlier, Treasurys had registered little reaction to the release of initial unemployment claims, which fell to 1.3 million last week from 1.4 million the previous week.

In recent months, economic data has repeatedly beat analysts' expectations, helping buoy riskier assets like stocks even as confirmed coronavirus cases in the U.S. have climbed again. Demand for Treasurys, however, has also persisted, reflecting both doubts about the economic recovery and confidence that the Federal Reserve will continue to buy Treasurys and keep short-term interest rates near zero.

Underscoring investors' appetite for longer-term Treasurys, the Treasury Department sold $29 billion of 10-year notes Wednesday at a record low yield of 0.653%. Traders put in bids for 2.62 times the amount of bonds that were sold - - a big increase from the 2.26 ratio for last month's 10-year-note auction, according to Jefferies LLC.

Thursday's auction presented another test for the market. But, again, the challenge was easily met, with the 30- year bonds sold well below the expected level at 1.330%.

Some investors worry that longer-term yields are bound to rise soon based on the improving economic data and deluge of new debt entering the market from both the government and the corporate sector.

Another strong auction, however, "could spur buying in all fixed-income sectors if investors decide waiting for Treasury supply to raise all interest rates might not be the best plan," Jim Vogel, interest-rates strategist at FHN Financial, wrote in a morning note to clients.

In recent trading, the yield on the current benchmark 30-year bond was 1.303%, according to Tradeweb. That was down from 1.353% just before the afternoon auction and 1.391% at Wednesday's close.

Write to Sam Goldfarb at sam.goldfarb@wsj.com


  (END) Dow Jones Newswires
  07-09-20 1141ET
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