U.S. Treasury debt prices were flat to slightly highe on Wednesday in thin trading, after a lackluster 10-year auction that raised concerns about weakening demand for long-term government paper.
Treasurys sold off in the aftermath of the auction, which saw a higher-than-expected yield, suggesting investors are demanding a premium to hold U.S. debt. Foreign central bank participation declined again, continuing a trend seen since February.
The high yield for the U.S. 10-year note was 2.648 percent versus 2.64 percent at the bid deadline. Bids totaled $60.5 billion for a decent 2.88 bid-to-cover, versus 2.63 in April and an average of 2.65.
Indirect bidders, which include foreign central banks, took just 36.1 percent of the 10-year note, compared to last month's 49.3 percent, and a 45.2 percent average.
"The auction was a little disappointing. We tailed out a bit and the indirect bidding was on the lower side," said Kim Rupert, managing director at Action Economics in San Francisco.
In afternoon trading, 10-year notes were up 3/32 in price to yield 2.634 percent, from 2.648 percent late on Tuesday. Earlier in the global session, 10-year yields hit a one-month high of 2.662 percent.
Rupert thinks demand for Treasuries has faded for now, noting that the expected demand for U.S. debt in the aftermath of the European Central Bank's easing measures has yet to materialize.