US Treasury prices rose on Thursday, following through on overseas debt rallies and getting lift in shorter maturities from federal officials pushing back an auction of 2-year Treasury notes because of the debt-ceiling limit. European debt markets jumped as European Central Bank President Mario Draghi signalled easier monetary policy in the euro zone was on its way. Benchmark German two-year bond yields struck a record low of -0.322 percent down over 7 basis points on the day as markets began to price in another cut to official rates.
"It seems to be following the bund market, which performed strongly today," said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York. A Treasury announcement in Washington detailing the unusual auction delay, originally expected on Tuesday, knocked the comparable US two-year note's yield to a session low of 0.596 percent. Yields on the note, a maturity especially sensitive to Federal Reserve interest-rate shifts, were last at 0.60 percent, reflecting a 2/32 price gain.
Other shorter-term Treasuries, including the five year note, were also up in price. The five-year was last yielding 1.34 percent on a price gain of 2/32, according to Reuters data. "This means same demand and less supply. It's created more safe haven demand for Treasuries in these times of uncertainties with the two-year note leading the way," said John Canavan, market strategist at Stone & McCarthy Research Associates in Princeton, New Jersey. "The announcement was not expected."
The Treasury said it would go ahead with other debt sales next week but added there was a risk the government might not be able to settle the 2-year note on November 2. With US stocks ahead more than 1 percent, yields on the 30-year Treasury bond were as high as 2.90 percent before easing to 2.86 percent, reflecting a price rise of 4/32. Stocks were lifted by strong corporate profits from McDonald's and others, as well as by jobless-claims data that were the lowest on a four weeks-average basis since 1973.
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