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U.S. Treasuries Fall After Government Auctions $21 Billion of New Notes
Feb. 7 (Bloomberg) -- U.S. Treasuries fell, reaching their lows of the day, after demand declined at the government's $21 billion sale of three-year notes.
The new securities were sold at a yield of 4.595 percent, compared with the 4.592 percent pre-auction average estimate of eight bond-trading firms surveyed by Bloomberg News. The sale is the first of three this week totaling $48 billion.
The benchmark 10-year note's yield rose 3 basis points, or 0.03 percentage point, to 4.58 percent at 1:03 p.m. in New York, according to bond broker Cantor Fitzgerald LP. The price of the note due in November 2015 declined almost 1/4, or $2.50 per $1,000 face amount, to 99 7/16.
The Treasury last sold three-year notes in November, issuing $18 billion of the securities at a yield of 4.458 percent. The Treasury resumed selling the notes in May 2003 after a five-year hiatus.
For every $1 sold today, there was $2.03 worth of bids, the lowest last February and below the $2.42 worth in November. For the past 12 sales, the bid-to-cover ratio, which gauges demand by comparing the volume of bids with the amount of securities offered for sale, ranged from $1.32 to $3.17 and averaged $2.25.
Auctions
Indirect bidders, the class of investors that includes foreign central banks, bought 22 percent of the securities, the fewest since August 2003. Indirect bidders purchased less than 30 percent of the three-year notes sold in each of the past two auctions as well, down from an average of 44.5 percent in the previous six sales.
Since the Treasury began releasing bidder-participation figures in May 2003, the share of three-year notes won by indirect bidders has ranged from 18.7 percent to 53.6 percent, and averaged 36.8 percent.
The U.S. government, which sells debt to raise money to finance its budget deficit, will auction $13 billion of 10-year notes tomorrow and $14 billion of 30-year bonds the next day. The 30-year bond sale is the first since August 2001.
Treasuries have fallen over the past two weeks as traders increased bets the Fed will raise interest rates further on signs the economy is rebounding from a fourth-quarter slowdown.
Interest-rate futures show traders are pricing in an almost 90 percent chance the central bank will raise the federal funds target rate to 4.75 percent at its next meeting on March 28, up from 58 percent two weeks ago. The odds of another quarter-point increase at the May 10 meeting rose to about 40 percent, from zero percent two weeks ago.
Feb. 7 (Bloomberg) -- U.S. Treasuries fell, reaching their lows of the day, after demand declined at the government's $21 billion sale of three-year notes.
The new securities were sold at a yield of 4.595 percent, compared with the 4.592 percent pre-auction average estimate of eight bond-trading firms surveyed by Bloomberg News. The sale is the first of three this week totaling $48 billion.
The benchmark 10-year note's yield rose 3 basis points, or 0.03 percentage point, to 4.58 percent at 1:03 p.m. in New York, according to bond broker Cantor Fitzgerald LP. The price of the note due in November 2015 declined almost 1/4, or $2.50 per $1,000 face amount, to 99 7/16.
The Treasury last sold three-year notes in November, issuing $18 billion of the securities at a yield of 4.458 percent. The Treasury resumed selling the notes in May 2003 after a five-year hiatus.
For every $1 sold today, there was $2.03 worth of bids, the lowest last February and below the $2.42 worth in November. For the past 12 sales, the bid-to-cover ratio, which gauges demand by comparing the volume of bids with the amount of securities offered for sale, ranged from $1.32 to $3.17 and averaged $2.25.
Auctions
Indirect bidders, the class of investors that includes foreign central banks, bought 22 percent of the securities, the fewest since August 2003. Indirect bidders purchased less than 30 percent of the three-year notes sold in each of the past two auctions as well, down from an average of 44.5 percent in the previous six sales.
Since the Treasury began releasing bidder-participation figures in May 2003, the share of three-year notes won by indirect bidders has ranged from 18.7 percent to 53.6 percent, and averaged 36.8 percent.
The U.S. government, which sells debt to raise money to finance its budget deficit, will auction $13 billion of 10-year notes tomorrow and $14 billion of 30-year bonds the next day. The 30-year bond sale is the first since August 2001.
Treasuries have fallen over the past two weeks as traders increased bets the Fed will raise interest rates further on signs the economy is rebounding from a fourth-quarter slowdown.
Interest-rate futures show traders are pricing in an almost 90 percent chance the central bank will raise the federal funds target rate to 4.75 percent at its next meeting on March 28, up from 58 percent two weeks ago. The odds of another quarter-point increase at the May 10 meeting rose to about 40 percent, from zero percent two weeks ago.