US Treasury debt prices rose on Wednesday on month-end extension trading as markets resumed operation following a huge storm in the US Northeast that shut the bond market for a day and a half. Traders said portfolio managers were buying Treasury debt to adjust average portfolio durations to meet benchmarks by the end of October, a month in which Treasuries saw a moderate rise in yields.
"Some month-end demand and the pullback in equities from their early highs have helped the market" on Wednesday, said John Canavan, strategist at Stone & McCarthy Research Associates in Princeton, New Jersey. Benchmark 10-year US Treasury notes traded 6/32 higher in price to yield 1.69 percent, down from 1.72 percent late Monday. Benchmark yields gained nine basis points on the month, as some evidence the US economic recovery may be gaining traction undermined the overall safe-haven allure of US government debt. Still, Treasuries remain range-bound in continued worries over the eventual outcome of Europe's debt crisis, uncertainty over the pending "fiscal cliff" of tax increases and US government spending cuts, and during a tight race leading to US presidential elections next week.
On Wednesday, Treasury debt yields were trading very near the middle of a range of 1.54 percent to 1.89 percent that has dominated since early August. The market closed early on Monday, and was shut all day on Tuesday because of disruptions in power and transportation caused by monstrous storm Sandy, which hit the south New Jersey coast on Monday night with hurricane-force winds. Sandy was the worst storm to strike the metropolitan New York area in 75 years.
On Wednesday, volume was light with some trading desks still thinly staffed. Early selling in 30-year bonds, based on the rationale that insurance companies would sell long-dated securities to make payments for damage from the storm, dwindled, and bonds then edged higher along with the rest of the market.
The 30-year bond on Wednesday afternoon traded 11/32 higher in price with its yield slipping to 2.85 percent from 2.89 percent late Monday. Analysts believe the impact of th"The Treasury announced another $72 billion refunding package as expected," he said. The Treasury said it would sell $32 billion in three-year notes, $24 billion in 10-year notes, and $16 billion in 30-year bonds next week on Tuesday, Wednesday and Thursday respectively.
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