Longer-dated US Treasuries edged higher as investors prepared for a $22 billion auction of 30-year debt, testing demand near multi-decade yield highs. Thirty-year bonds advanced Thursday, with yields down a basis point to 5.66%, just off their highest levels since 2002. The Treasury sale follows a robust 10-year note auction that drew strong investor demand, signaling potential stabilization.
Rates strategist Angelo Manolatos of Wells Fargo Securities noted the turnaround may reflect strengthening end-user demand. Global longer-term debt has sold off amid concerns over the Iran war’s impact on energy costs and inflation, compounded by fiscal worries. Fresh Middle East escalation pushed oil above $105 a barrel, renewing inflation fears that could prompt further Federal Reserve action.
Two-year yields rose nearly five basis points to 4.81%, while traders priced in a 20% chance of a rate hike this month and full expectations of a move by year-end. The benchmark 10-year yield edged up to 5.29%. The $39 billion 10-year auction drew a yield below market rates, with non-dealer investors taking down a record 97.5%.
The 30-year sale will be followed by a Treasury buyback of up to $6 billion in bonds maturing in 20 to 30 years. TD Securities’ Molly Brooks noted yields are finding resistance levels that may attract more buyers if the rally holds.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing