US Treasury prices gained on Wednesday after a two-day selloff raised yields enough to lure buyers, and also helped the US government sell long-dated debt to strong demand. Bonds had weakened this week as risk appetite surged on expectations of new stimulus from Japan, helping send US shares to record highs and reducing demand for safe haven bonds.
The increase in yields drew more investor interest on Wednesday, even though they remained near historical lows. "We are continuing to see foreign buying on any type of pullbacks," said Mary Ann Hurley, vice president in fixed income trading at D.A. Davidson in Seattle. Benchmark 10-year notes ended up 14/32 in price to yield 1.468 percent, down from 1.513 percent on Tuesday.
The notes hit record low yields of 1.321 percent last Wednesday on concerns about slowing global growth, which were accelerated by Britain's vote to leave the European Union. Renewed demand for US debt helped the Treasury Department sell $12 billion in 30-year bonds, the final sale of $56 billion in coupon-bearing supply this week. The bonds sold at a yield of 2.172 percent, the lowest on record for this maturity at an auction. Indirect bidders, which include fund managers and some central banks, bought a record 68.5 percent of the sale.
Thirty-year bonds have outperformed recently as investors have reached for longer durations to generate yield as interest rates globally have plunged, turning negative in countries from Germany to Japan. The auction comes after a $24 billion sale of three-year notes on Monday and a $20 billion sale of 10-year notes on Tuesday both saw the weakest demand since 2009. Demand for three-year notes was likely hurt by rising expectations that the Federal Reserve may raise interest rates at its December meeting, after a stronger-than-expected employment report for June showed continuing economic strength.
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