US Treasury bond yields fell slightly on Wednesday after key 10-year Treasury bond data showed sufficient demand to allay fears from investors worried about a possible collapse in government debt demand and a recent surge in interest rates did.
The benchmark 10-year Treasury note yield fell 3 basis points to 1.513% around 1:30 p.m. ET. The 30-year government bond yield fell 1 basis point to 2.244%. The yields move inversely to the prices (1 basis point corresponds to 0.01%).
The banknote auction showed adequate demand for $ 38 billion in government bonds with a maturity of $ 10 billion, which allayed traders’ concerns about the country’s growing debt burden, which the market could not stand, weighed on demand for bonds and increased returns even further.
The US 10-year bond auction yield was 1.523%. The offer for cover of 2.38 was slightly below the annual average of 2.42.
“It was a soft auction, but not enough to scare people afterward,” said John Briggs, director of global strategy for NatWest Markets. “It’s not terrible. I think that’s what people worried about.”
The Treasury Department printed around $ 3.6 trillion in new national debt last year to prop up the economy ravaged by the Covid-19 pandemic. The increased supply of government debt and weak demand at a bond auction in February drove interest rates higher. The yield on 10-year US Treasuries has flirted at 1.6% in the past few weeks, putting pressure on stocks.
“I don’t think moving the needle is enough. I would consider it mediocre,” Bleakley Advisory Group chief investment officer Peter Boockvar told CNBC. “I think this reflects that long-end returns needed a break after spiking.”
On the previous Wednesday, the consumer price index for February was in line with expectations. The Labor Department said on Wednesday its consumer price index rose 0.4% last month after rising 0.3% in January. In the twelve months to February, the CPI rose 1.7%, the largest increase since February 2020 after rising 1.4% in January.
Concerns about higher inflation have fueled bond yields recently.
The $ 1.9 trillion stimulus package is expected to add juice to the economy. This has led to inflation concerns and the market may be startled by a CPI report hotter than expected.
The House Democrats want to pass the economic law on Wednesday. President Joe Biden is expected to sign it before major unemployment programs expire on Sunday.
– CNBC’s Patti Domm and Yun Li contributed to this report.