US Treasury prices rose on Thursday as weak Chinese data pushed investors to buy safe-haven government debt after two straight days of selling. China's exports fell 10 percent for September from a year earlier, far worse than the 3 percent fall expected, and imports unexpectedly shrank, suggesting an apparent recovery in the world's second-largest economy may not be materialising.
"The big story is a little bit more of a global one today," said Gennadiy Goldberg, interest rates strategist at TD Securities in New York. The bid for Treasuries also may have been a result of selling over the past two days, Goldberg said. After the Treasury market closed for the Columbus Day holiday on Monday, Treasury yields rose across the board on both Tuesday and Wednesday with benchmark 10-year yields moving above 1.80 percent for the first time in four months in early Wednesday trading.
The 10-year note rose 12/32 in price to yield 1.739 percent, down 4 basis points from late Wednesday to a nearly one-week low. The 30-year bond rose 22/32 in price to yield 2.476 percent, its lowest since October 7. A move lower in US stocks early in the day and solid demand at a $12 billion auction of 30-year government bonds, the last part of this week's $56 billion in coupon-bearing supply, added marginally to price gains during the day.
"The auction was quite positive," said Bruno Braizinha, interest rates strategist at Societe General in New York. The in-line demand boosted prices slightly but most of the move was attributable to risk-off trading as a result of the poor Chinese data, he said. Investors will next look to Friday's US retail sales data and remarks from Federal Reserve Chair Janet Yellen, who will give a luncheon keynote address at the Boston Fed's 60th Economic Conference. Fed fund futures prices show investors see a 65-percent chance the Fed will raise rates at least once this year, with traders overwhelmingly positioned for a December, rather than November, hike.