Bonds

Treasurys rally after strong 30-year bond auction

CNBC with Reuters
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Treasurys


Bond prices rallied on Thursday after the U.S. government's auction of 30-year Treasury bonds, the last of three debt auctions this week.

The Treasury Department auctioned $13 billion of 30-year bonds at a high yield of 3.444 percent. The bid-to-cover ratio, an indicator of demand, was 2.69.

Indirect bidders, which include major central banks, were awarded 51.8 percent, above the 43.1 percent last month.

After the auction, prices on the 30-year bond jumped 1 4/32 to yield 3.407 percent. The 10-year note also rallied with prices up 17/32 to yield 2.588, a session low.

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The sale was the strongest of three for the week, which started with a $28 billion auction of 3-year notes on Tuesday and a $21 billion sale of 10-year notes on Wednesday.

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Earlier data showed that U.S. retail sales rose less than expected in May and first-time applications for unemployment benefits increased last week. These numbers though were not big shockers and are less likely to alter the timing of the Federal Reserve's first interest rate increase after the end of its asset-buying plan.

The retail sales figure was the last major economic data reported before next week's two-day monetary policy meeting of the U.S. central bank.

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"The numbers won't change the outlook for the Fed meeting next week. It's not a big enough of a miss,'' said Stanley Sun, interest rate strategist at Nomura Securities in New York. "It's still kind of a muddle-through scenario for the U.S. economy, which in general is still constructive for Treasuries. Yields are rich, but as long as we don't see the data bouncing back, there's no reason to sell.''

—CNBC.com with Reuters