MW: U.S. 10-year-bond yields rise to highest level since June
Coming bond auction will test demand: RBS
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices fell again on Wednesday, pushing 10-year-bond yields to the highest level since June, ahead of the government’s auctions of the benchmark securities.
Yields on 10-year notes (UST10Y 3.20, +0.06, +1.88%) , which move inversely to prices, rose 5 basis points to 3.19%.
The yields touched 3.25% during the Asian trading session, the highest level in six months.
Yields on 2-year notes (UST2YR 0.59, +0.06, +11.29%) rose 5 basis points to 0.59%, touching the highest level since September.
Thirty-year-bond yields (UST30Y 4.38, +0.00, +0.09%) were little changed at 4.37%.
On Tuesday, yields jumped by the most since June 2009.
Also on tap is the Federal Reserve’s next bond purchase, the latest in what’s been considered its second round of quantitative easing, nicknamed QE2.
The Fed will complete the buyback a little after 11 a.m. Eastern time.
The central bank previously said it intends to buy $1 billion to $2 billion in Treasury Inflation Indexed Securities, or TIPS, maturing from 2012 to 2040.
At 1 p.m. Eastern time, the Treasury Department will announce the results of its sale of $21 billion in 10-year notes. The auction is a reopening, meaning the debt sold will mature at the same time and carry the same coupon as the sale in October.
The auction “will tell us a lot about the state of the market,” said bond strategists at RBS Securities. “It will all come down to whether foreign accounts, domestic fund managers and dealers think that the backup has gone far enough.”
The government will finish its auctions with a sale of 30-year bonds on Thursday.
On Tuesday, an auction of 3-year notes (UST3YR 0.94, +0.11, +13.15%) garnered tepid demand, even after yields had jumped considerably in recent days. See more on auction results.
