6 hrs ago
Treasury Yields Fall After Strong 30-Year Bond Auction
The US government sold $22 billion in bonds that will be paid back over 30 years.
Many investors wanted to buy them, even though the bonds offer high interest payments.
After the sale, prices of Treasury bonds went up and their yields went down.
The yield on 30-year bonds fell to 5.61%.
The Treasury also bought back $6 billion of older bonds.
Investors were watching worries about the Iran war and its possible effects on oil prices and inflation.
President Donald Trump said he would wait until after the US midterms before attacking Iran again.
Oil prices fell from an earlier high, which helped ease some near-term worries.
A $22 billion US auction of 30-year bonds drew solid demand, following a strong 10-year auction earlier in the week.
The 30-year Treasury yield fell six basis points to 5.61%; the auction yield was 5.618%.
Primary dealers received 6.8% of the sale, below their recent 10% average.
The Treasury followed the auction with a $6 billion buyback of bonds maturing in 20 to 30 years.
Yields also fell as oil prices retreated and Trump said he would delay further attacks on Iran until after the Nov. 3 US midterms.
- Who
- US Treasury investors and the US Treasury Department; President Donald Trump also made a statement affecting market sentiment.
- What
- Treasury yields fell after strong demand at a $22 billion auction of 30-year bonds, followed by a $6 billion buyback of longer-dated bonds.
- Where
- The US Treasury market.
- When
- Thursday; the auction bidding deadline was 1 p.m. New York time. Trump said he would hold off on attacking Iran again until after the US midterms on Nov. 3.
- Why
- The high yields attracted buyers, while Trump's statement and falling oil prices eased some near-term concerns about Iran-related escalation and energy costs.
Reasons for Treasury Rally
Risks Still Facing Bond Investors
Investor demand
Reasons for Treasury Rally
The $22 billion 30-year bond sale drew solid demand, with only 6.8% awarded to primary dealers, below their recent 10% average. A strong 10-year auction earlier in the week also suggested buyers were attracted by high yields.
Risks Still Facing Bond Investors
The article notes that long-term bonds have sold off in recent months amid fiscal concerns and worries that the Iran war could raise energy costs and inflation.
Iran-related market risk
Reasons for Treasury Rally
President Donald Trump said he would hold off on attacking Iran again until after the US midterms, easing near-term concerns about oil supply and escalation, according to market strategists.
Risks Still Facing Bond Investors
The change was described as a near-term removal of escalation risk, not a resolution of the broader concerns tied to the conflict and inflation.
Key facts
- 30-year auction size
- $22 billion
- Auction yield
- 5.618%
- When-issued yield at bidding deadline
- 5.617%
- 30-year Treasury yield after auction
- 5.61%, down 6 basis points
- Share awarded to primary dealers
- 6.8%, compared with a recent average of 10%
- Treasury buyback
- The Treasury repurchased $6 billion of bonds maturing in 20 to 30 years.
- Two-year Treasury yield
- 4.75%
- Oil price cited
- Oil had earlier peaked around $105 per barrel before falling.
Quotes
Molly Brooks
Rates strategist at TD Securities
“If we are able to see the rally hold for a few days, I think that would bring even more buyers back into the market that have been waiting for the greenlight.”
livemint.com
“There was a lot of rumbling about potential pre-midterm strikes, so this takes some pressure off near-term oil.”
livemint.com
Sources
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