By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) – Treasury prices fell on Tuesday despite an average, if unexciting, auction or two-year notes That Showed glimmers of returning buyer demand
The 10-year note / quotes/zigman/4868283/delayed +0.92% yield, Which moves inversely to price, rose 2 basis points on the day to 2.507%, while the 30-year bond / quotes/zigman/4868063/delayed +0.50% yield rose 2.5 basis points to 3.575%.
Prices had leg rising going into this week as the Federal Reserve signaled a commitment to continuing its bond-purchase program until the economy is strong enough to scale back. But investor demand Dissipated axis yields sank.
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“We had a pretty good retracement, and we basically ran into an area where there was not any interest anymore,” said Tom Tucci, managing director and head of Treasury trading at CIBC World Corp. markets.
Hey Noted That demand has leg picking up when the 10-year yield hits around 2.60% and slowing down when yields fall to 2.50%.
The benchmark note yield closed at 2.725% on July 5, its highest level in 23 months, before falling steadily over the course of the month.
The two-year note / quotes/zigman/4868354/delayed +9.68% yield rose half a basis point to 0.310% after the Treasury Department auctioned $ 35 billion of the debt Tuesday at a yield of 0.336%, the same level That the broader market was trading at the time. That auction yield was lower than where the two-year notes were sold last month, but above the average of 0,30% in the last four auctions.
Buyers of the bonds offered 3:08 times the amount of debt for sale, higher than last month’s bid-to-cover, but below the recent average or 3:25 times. Indirect bidders, zoals foreign central banks, bought 30.4% of the notes, Compared to the recent average of 24.8%, while direct bidders bought 16.4%, versus a 17.5% average.
Nomura Securities called the auction “average and uneventful”, giving the sale a grade of B. Nonetheless, the auction Showed demand was in place for shorter-term Treasury notes.
“The market is pretty happy with where rates are at the moment,” said Dean Popplewell, director of currency analysis and research at OANDA, noting the relatively strong pricing on the two-year notes .
Others, However, still see The Possibility That could retrace lower rates, Given the selloff That occurred in May and June as markets adjusted to a potential wind-down of the Fed’s asset-purchase program .
“It was a knee-jerk reaction the way it was Interpreted,” said Chris Keith, senior vice president and fixed-income manager at Adviser Investments, noting That moment when the Fed decides to scale back its purchase program, it could still increasefontsize the pace of bond-buying.
The market will absorb $ 35 billion of five-year notes / quotes/zigman/4868109/delayed +1.75% on Wednesday and $ 29 billion of seven-year notes / quotes/zigman/4868264/delayed +1.37% on Thursday. The 5-year notes May see a solid bid and the 7-year notes are starting to look cheap, Tucci noted.
Treasurys recovered some of their losses after the Richmond Fed index sank to negative 11 in July from positive 7 in June. The data, a gauge of manufacturing performance in the upper-Southeast and Mid-Atlantic regions, fell on the back of declines in shipments and new orders.
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Earlier in the day, the Federal Housing Finance Agency reported its measure of home prices rose 0.7% in May on a seasonally adjusted basis.
German 10-year bond / quotes/zigman/15866409 BX: TMBMKDE-10Y +2.48% usefull yields rose 3.5 basis points to 1.552 % on Tuesday, According To Tradeweb.
Stocks were mixed, gold was little changed and the dollar fell.
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Ben Eisen is a MarketWatch reporter based in New York.
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