NEW YORK: US Treasuries prices rose on Thursday as a three-day rise in yields lured investors to buy government debt both on the open market and at a $13 billion auction of 30-year bonds, the final part of this week's $66 billion in longer-dated supply.
Thursday's 30-year bond sale fetched lukewarm demand, and the data of all three auctions this week suggested that an anticipated surge in US bond demand from Japanese banks, insurers and pension funds has yet to materialize.
The lackluster auction briefly shaved the bond market's gains in the afternoon before another bout of bargain-hunting emerged, but buying was limited by a high-flying stock market, with the Dow Jones industrial average and the Standard & Poor's 500 reaching all-time highs.
The bond market clung to earlier gains after a sell-off earlier in the week drove longer-dated US yields from their lows of the year back to levels prior to last Friday's disappointing US government payroll report.
The US bond market rallied last week after the Bank of Japan announced a bold $1.4 trillion asset purchase program aimed at stimulating the country's sluggish economy. The news sent Japanese government debt yields to record lows and fed bets that Japanese investors would scramble for Treasuries and other higher-yielding foreign bonds.
This week's auction results "didn't suggest much of a pickup in that bid," said John Canavan, market strategist at Stone & McCarthy Research Associates in Princeton, New Jersey.
Benchmark 10-year Treasury notes last traded 3/32 higher to yield 1.795 percent, down 1.0 basis point from late on Wednesday.
The 30-year bond last traded 2/32 higher to yield 3.001 percent, down 0.4 basis point from Wednesday.
The spread between 30-year and five-year yields held steady on the day at 2.27 percentage points. It was tighter than 2.29 points a week ago after the BoJ announced its stimulus plan.
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