US Treasury debt yields rose on Wednesday, bolstered by a fresh batch of economic data that enhanced the outlook for third-quarter US gross domestic product data due on Friday. Gains in US Treasury yields also spurred rises in other global bond markets. But yields, which move inversely to prices, were capped as the decline in oil kept inflation expectations in check.
Benchmark US 10-year yields climbed to more than one-week peaks. Ten-year yields have risen more than 18 basis points so far this month, on track for their best monthly performance since June of last year. US two-year yields, which are most sensitive to Federal Reserve rate hike expectations, advanced to two-week highs and have gained nearly 11 basis points so far in October.
"There is continuing new optimism about the third quarter US GDP report that we will get on Friday," said Jim Vogel, interest rates strategist at FTN Financial in Memphis, Tennessee. Data showed on Wednesday that new US single-family home sales unexpectedly rose in September. Other reports also suggested a stronger pickup in economic growth in the third quarter than currently anticipated.
The rise in US rates spilled over to foreign markets, extending their gains. German bund yields were higher at 0.087 percent, while that of 10-year British bonds rose to 1.155 percent. European bond prices have also been weighed down by supply with auctions in Italy, Germany and Portugal.
The US Treasury's auction of five-year notes showed decent demand, awarded at 1.303 percent, the highest yield since May. However, the yield was a lot cheaper than September's 1.129 percent rate. US five-year note prices were last down 4/32, yielding 1.302 percent.
In late trading, 10-year Treasury notes were down 10/32 in price, yielding 1.793 percent, up from 1.758 percent late on Tuesday. Earlier, 10-year yields hit a more-than-one-week peak of 1.797 percent. US 30-year bonds were 26/32 lower to yield 2.542 percent, up from Tuesday's 2.502 percent. US two-year note yields were at 0.872 percent, up from Tuesday's 0.863 percent. Earlier in New York, two-year yields hit a two-week high of 0.876 percent.