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Treasurys hold losses after 3-year note supply

Tuesday, 12 Nov 2013 | 4:21 PM ET
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U.S. Treasurys prices fell on Tuesday as investors made room for this week's government debt supply in the aftermath of a surprisingly strong reading on job growth in October.

The Treasury auctioned $30 billion in three-year notes at a high yield of 0.644 percent. The bid-to-cover ratio, an indicator of demand, was 3.46. This auction will be followed by a $24 billion sale of 10-year debt on Wednesday and a $16 billion auction of 30-year bonds on Thursday.

Benchmark 10-year Treasury notes slipped 7/32 in price to yield 2.775 percent. Bond yields rose to their highest since mid-September but they were still lower than a month ago.

It is unclear whether these higher yield levels will bolster bidding at this week's November refunding, where the Treasury Department is selling $70 billion in debt.

Fed may begin taper next meeting: Goolsbee
Former Council of Economic Advisers Chairman Austan Goolsbee discusses when the Fed may decide to taper. "I think there is at least a 50 percent chance the Fed decides to taper at the next meeting," he says. JPMorgan's Thomas Lee, weighs in.

The 204,000 payroll gain last month easily beat estimates, which had been based on assumed job losses from the 16-day federal government shutdown. The upbeat hiring news kindled speculation about the chances the Federal Reserve might shrink its $85 billion monthly bond purchases at its December policy meeting rather than early 2014.

Still the overall jobs report contained enough worrisome data about labor conditions that some economists reckon the central bank will refrain from scaling back its third round of quantitative easing, which was implemented a year ago with the goal to support the economic recovery.

—By Reuters

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