Treasury prices hold losses after weak 30-year auction

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US sovereign debt remained weaker after a $15bn auction of 30-year Treasuries, as a sell-off in the long-dated notes on Thursday ended a three day rally that had driven the yield back below 3 per cent.

Yields on the US paper were 6 basis points higher on the day to 3.01 per cent, as yields across the curve rose. Yields increase as bond prices decline.

The auction followed a “weak” $23bn sale of 10-year notes on Wednesday, said Peter Boockvar, the chief market analyst of economic advisory firm The Lindsey Group. The bid-to-cover ratio at Thursday’s 30-year sale — a measure of demand — “was a touch below the 12 month average”, he added.

Ten-year Treasury yields have swung at least 5 basis points higher or lower on three of the four trading days this week, as the momentum behind the so-called Trump Trade fizzles.

The bet on faster economic growth and higher inflation, spurred by deregulation, government stimulus and tax cuts, has come under renewed scrutiny as political wrangling in Washington captures investor attention.

“The bond market and the US dollar seem to go back and forth on what to expect from Trump’s fiscal plan,” said Mr Boockvar. “Looking at the benchmark 10-year, the yield range of 2.3 to 2.6 per cent, now going three months still looks intact until proven otherwise.”

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