TREASURIES-Bonds down on weak 30-yr auction

* Bonds down on poor 30-year debt sale

* 30-year bond yields highest since May

* Indirect bidders of long bonds higher than average

* Fed announces new debt buying details

NEW YORK, Nov 10 (BestGrowthStock) – U.S. Treasuries slid in
volatile trade on Wednesday after a weak 30-year auction,
though bargain hunting pulled bonds off the day’s lows.

The poor 30-year bond auction highlighted worries demand
for longer dated debt is dwindling after that sector of the
yield curve was sidelined by the U.S. Federal Reserve in its
planned $600 billion purchases.

The bid to cover ratio in the $16 billion, 30-year bond
sale came in below average at 2.31, demonstrating lackluster
sentiment on longer dated bonds.

“This was not a good auction, and the negative sentiment
for the long end of the curve keeps building,” said Kevin
Giddis president of fixed-income capital markets at Morgan
Keegan in Memphis, Tennessee.

The 30-year bond (US30YT=RR: ) was last down 11/32 in price,
sending yields to 4.27 percent, up from 4.25 percent late on
Tuesday.

Long bond yields rose as far as 4.33 percent during the
worst of the sell-off, the highest since May.

However, the market pared losses after traders who bet
against Treasuries before the auction covered positions and
longer term investors found value in bonds, which have been
beaten down in the last two days.

“The bond is very cheap and oversold,” said John Spinello,
chief fixed-income technical strategist at Jefferies & Co. in
New York.

The Federal Reserve will buy about $105 billion of
Treasuries and Treasury inflation-protected securities in 18
operations from Nov. 12 through Dec. 9, the New York Fed said.
For details, see [ID:nNYD003728]

It’s been a rough two days for Treasuries, which sold off
heavily on Tuesday on concerns the Fed’s policy would increase
inflation.

In one bright spot for bonds, the number of indirect
bidders participating in the auction came in higher than
average at 38.4 percent. That may be a bullish sign global
demand remains for U.S. government debt.

Indirect bidders typically includes buying by foreign
central banks.

The Federal Reserve also limited its purchases in the
auction to $429 million, which may suggest the central bank is
comfortable with rates on the long bonds.

“There was some expectation the Fed might take down more of
this auction because with the moves today and yesterday it
would be an opportunity for them to use their flexible program
to show the market they mean business,” said Brian Yelvington,
analyst at Knight Libertas in Greenwich, Connecticut.

“It looks like they are taking a stance right now that this
is not a level in rates that they care to defend,” he said.
(Reporting by Karen Brettell, Richard Leong and Ellen
Freilich; Editing by Andrew Hay)

TREASURIES-Bonds down on weak 30-yr auction