Bonds slip but U.S. debt auction cushions fall

NEW YORK (BestGrowthStock) – Treasuries prices fell on Wednesday as rising stocks and easing concerns over Europe’s debt problems cut demand for safe-haven assets but came off their lows after a well-bid U.S. government bond auction.

The U.S. sold $21 billion worth of 10-year notes in a well-attended reopening of previously issued securities. Yields at the sale came in below expectations, indicating investors were willing to pay a premium for the bonds.

The 10-year notes sale wasn’t the only closely watched bond offering of the day. Earlier, Portugal managed to sell its debt, albeit at much higher yields than in a similar sale two weeks before.

Despite the higher yields, markets took the Portugal sale as a signal to tone down the previous session’s risk aversion. The U.S. auction, however, removed one of the major negatives for Treasuries since looming supply had weighed on prices.

“Treasuries were trading lower on the day ahead of the auction, building in a solid concession as the 10-year sector underperformed. Since the results, Treasuries have firmed,” said Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut.

Benchmark 10-year notes trading on the open market were last down 15/32 in price, yielding 2.65 percent versus Tuesday’s close of 2.59 percent. They were trading down 24/32 before bidding deadline for Wednesday’s auction.

(Reporting by Burton Frierson)

Bonds slip but U.S. debt auction cushions fall