NEW YORK: US Treasury debt prices slipped on Wednesday on news of stronger-than-expected retail sales in February, but nearly all the day's losses were erased after the Treasury's sale of 10-year notes drew strong demand.
The robust retail sales followed other data showing improved employment growth and housing sector gains that support demand for riskier assets at the expense of safe-haven US debt.
But the strength of the Treasury's 10-year note auction showed the powerful draw of higher yields.
"The 10-year auction was very strong with demand from a wide variety of non-dealer bidders," said Jake Lowery, Treasury trader at ING Investment Management in Atlanta, Georgia. "The 2.05 percent yield at the bidding deadline was very close to the recent highs in yield and presented an opportunity to market participants who had been starved for yield for some time."
Foreign central banks, large fund managers and other indirect bidders on Wednesday bought their biggest share of a $21 billion US 10-year Treasury note offering since December 2011, according to data released by the US Treasury Department.
"The 10-year note auction went tremendously well," said John Canvan, market analyst at Stone & McCarthy Research Associates in Princeton, New Jersey. "The auction stopped far below the 1 p.m. bid side, and the bid/cover was the best since last October. The buyside take-down figures were exceptional."
The benchmark 10-year Treasury note, down 9/32 immediately before the auction, had erased that loss and was nearly unchanged on the day in mid-afternoon trade. It yielded 2.02 percent, down from 2.05 percent at the bidding deadline, and unchanged from late Tuesday.
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