US Treasury yields were little changed on Wednesday as dealers bought and sold government bonds to hedge securities they underwrote, which was led by Saudi Arabia's first-ever global bond issue. Saudi Arabia's $17.5 billion multipart debt offering, the largest ever from an emerging-market government, drew heavy demand as the world's top oil exporter sought to borrow at historic low yields.
Other notable deals on Wednesday included a $3.5 billion offering from US bank Wells Fargo, according to IFR, a Thomson Reuters unit. Bond dealers typically sell Treasuries to hedge against an issue they underwrite and then buy them back after it is sold. "It's a huge deal. There's some rate-lock selling," Mary Ann Hurley, vice president of fixed income with D.A. Davidson in Seattle, said of the Saudi bond issue. "As the Saudi deal gets put away, you could see some reversal of that rate-lock selling."
Benchmark US 10-year Treasury notes were down 1/32 in price to yield 1.752 percent, up fractionally from late Tuesday. The 10-year yield bounced in a 4 basis point trading range and held below a four-month peak of 1.841 percent reached on Monday. Bond yields swung a bit after data showed a 38 percent tumble in US apartment construction in September, knocking overall home-building activity to its weakest in 1-1/2 years.
"That number is downright terrible," said Stan Shipley, a strategist at Evercore ISI in New York. Some analysts noted the report had a bright spot: domestic single-family home construction rose 8 percent to its strongest in seven months. The Federal Reserve's latest Beige Book, commenting on current economic conditions and released on Wednesday, acknowledged moderate US growth, with signs of rising wage pressure in September.
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