Treasurys mostly flat after strong 30-year bond sale


Treasurys pared earlier gains on Thursday after the U.S. government's auction of 30-year bonds saw strong demand.

Earlier, the Treasury Department auctioned $13 billion in 30-year bonds at a high yield of 3.24 percent, below the market rate at that time, compared to 3.224 in August.

The bid-to-cover ratio, an indicator of demand, was 2.67, the highest since June.

Indirect bidders, which include major central banks, were awarded 45.5 percent of the supply, while direct bidders took home 21.8 percent.

Benchmark 10-year Treasury notes rose 1/32 in price to yield 2.54 percent, while 30-year bonds gained 5/32 in price, bringing the yield down to a session low of 3.26 percent.

U.S. bonds moved higher earlier in the session as investors sought out the relative safety of fixed income, with global jitters raised on the 13-year anniversary of 9/11.

President Barack Obama on Wednesday evening said he had authorized airstrikes against Islamist militants in Syria as well as more attacks in Iraq, sparking a modest flight to safe haven assets. That effect was amplified by data showing U.S. jobless claims had risen unexpectedly in the latest week.

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Bond traders are also keeping a close eye on speculation that the Federal Reserve may drop some of its dovishness from its post-meeting statement next week.

The speculation that the Fed could remove the language about keeping rates low for a "considerable time" has been contributing to a rise in bond yield over the past few days, as Treasurys sell off.

A change in language would start the clock ticking for the Fed's first rate hike, according to some strategists. Some in the markets would likely put a time frame of six months before such a move, which would change the market expectations on the first rate hike by several months. Now it is mostly expected at about mid-year or third quarter, 2015.

—By CNBC Staff