US Treasury debt prices climbed on Thursday, as robust demand for $11 billion of 30-year bonds soothed initial concerns about investors ability to absorb this weeks massive supply. The post-auction rally encountered resistance by another positive day on Wall Street. US stocks were poised for a three-day streak of gains on the perception of stabilisation in the battered financial and consumer sectors.
"The overriding factor for the bond market has been the overwhelming supply," said Michael Materasso, co-chairman of the fixed-income policy committee at Franklin Templeton in New York. He said better-than-expected reception for 10-year and 30-year supply has calmed anxiety that investors were reluctant to buy more Treasuries.
The Treasury Department sold $182 billion in bills and notes this week. Benchmark 10-year notes were up 9/32 in price after gaining nearly a full point. Their yield, which moves inversely to their price, was 2.88 percent, down from 2.91 percent late Wednesday.
Two-year Treasuries were flat for a 1.03 percent yield, up 1 basis point from late on Wednesday. The overall demand for a reopening of the 30-year issue originally sold in February came in above its long-term average. Biddon funds, were so eager to own these bonds that they were willing to buy them at above market prices, analysts said.
"The auction was exceptional," said Lou Brien, market analyst at DRW Trading in Chicago. "The market was caught off guard with how well the auction performed." On Friday, the market will receive a snapshot on US consumer sentiment in early March from Reuters and the University of Michigan. It will also get figures on the trade deficit in January and import/export prices in February.