US Treasury yields fell on Thursday, with the 10-year yield dipping below 3 percent as buyers emerged following a week-long selloff spurred by concerns about rising inflation and growing borrowing by the US government.
The US Treasury Department sold $29 billion in seven-year notes to solid investor demand at a yield of 2.952 percent, the highest in eight years. The seven-year auction marked the final leg of this week's $96 billion in fixed-rate coupon-bearing supply.
Bidding for the latest wave of Treasury supply reduced concerns investors have turned more reluctant to buy US government debt, analysts said. "Each auction went better than the last. All in all, a solid end to the week's auctions," said John Canavan, market strategist at Stone & McCarthy Research Associates in New York.
Thursday's economic figures showed the US economy remains on a steady growth path but far from firing on all cylinders. That supported the view the Federal Reserve would stick to its gradual pace of rate increases and domestic inflation would stay muted, though edging closer to the Fed's 2 percent goal. The Commerce Department said orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, slipped 0.1 percent last month.
On the other hand, it said the advance goods trade deficit contracted sharply to $68.04 billion last month from $75.88 billion, reducing the drag on first-quarter economic growth. Separately, the Labor Department said the number of first-time applications for unemployment benefits fell to the lowest in more than 48 years last week.
On Friday, the government will offer its initial snapshot of first quarter US gross domestic product, which analysts polled by Reuters say likely grew at a 2.0 percent annualized pace. This was slower than the 2.9 percent rate set in the fourth quarter of 2017.
Overseas, European Central Bank President Mario Draghi played down traders' concerns about recent softness in the euro zone economy, leaving the door open to end the ECB's 2.55 trillion euro bond purchase program later this year.
In late afternoon trading, the 10-year Treasury yield was down nearly 3 basis points at 2.996 percent. It touched 3.035 percent on Wednesday, which was its highest since January 2014, Reuters data showed.
The two-year yield was marginally higher at 2.492 percent after peaking at 2.508 percent the prior day, a level last seen in September 2008. The 30-year yield was down 3 basis points at 3.178 percent. It reached a two-month high at 3.219 percent on Wednesday.
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