Treasuries fell, with the difference between 10-and 30-year yields widening to the most since September, as signs Europe’s debt crisis may be stabilizing reduced demand at auctions of the securities.
U.S. 30-year bond yields rose from almost the lowest level in a month as Greece and Italy took steps to form new governments and address budget and sovereign-debt problems, damping demand for haven assets. Yields were higher than forecast at 10- and 30-year Treasury auctions this week. Retail sales gained in October at a slower rate than September, according to a Bloomberg News survey before a Nov. 15 report.
“We continue to be transfixed by the events in Europe,” said Chris Ahrens, head rates strategist in Stamford, Connecticut, at UBS AG, one of the 21 primary dealers that are required to bid at Treasury auctions. “Because of the uncertainty and the low yields, people sat on their hands and left the dealer community to underwrite the auctions, which is why we are higher in yield on the week.”
Thirty-year yields rose two basis points, or 0.02 percentage point, to 3.11 percent in New York on Oct. 10, compared with Oct. 4. The bond market was closed yesterday. The 3.75 percent securities maturing in August 2041 fell 10/32, or $3.13 per $1,000 face amount, to 112 14/32.
Yield Difference
U.S. 10-year note yields rose two basis points to 2.06 percent. The so-called yield curve measuring the difference between 10- and 30-year debt reached 107 basis points, the most since Sept. 28.
Treasuries have rallied this year amid sluggish economic growth and haven demand linked to Europe’s debt crisis. U.S. debt has returned 8.6 percent, the most since 14 percent during the financial crisis in 2008, according to Bank of America Merrill Lynch index data.
On Nov. 10, the $16 billion 30-year sale of bonds drew a yield of 3.199 percent, compared with the average forecast of 3.148 percent in a Bloomberg News survey of eight of the Fed’s primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.40, compared with an average of 2.68 for the past 10 sales.
Bond prices weakened into the sale, producing a 4.7 basis point tail, or the difference between the lowest bid and the average bid in the auction, according to CRT Capital Group LLC. The Fed’s primary dealers purchased 55.7 percent of the bonds, the most since August.
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