Treasury Department auctions $13 billion of 30-year bonds at a high yield of 3.084%

Treasurys extended their downward slide Thursday after the government's auction of 30-year bonds saw tepid investor demand.

The Treasury Department auctioned $13 billion of 30-year bonds at a high yield of 3.084 percent, versus 3.138 percent in June. The bid-to-cover ratio, an indicator of demand, was 2.23, lower than the 2.38 recent average.

Yields, which move inversely to prices, hit session highs after the announcement. The yield on the benchmark 10-year Treasury note increased 9 basis points to 2.289 percent, while the 30-year bond yield rose more than 10 basis points to 3.081 percent.

Indirect bidders, which include major central banks, were awarded 51.1 percent, more than the 49 percent average. Direct bidders, which includes domestic money managers, bought 8 percent, versus a recent average of 15 percent.

"Following a decent three-year note auction on Tuesday and a good 10-year yesterday, today's 30-year bond auction was weak," Peter Boockvar, chief market analyst at the Lindsey Group, said in a note.

"Yields on the longer end of the curve remain well above the late January lows and I don't believe that is because the global growth outlook is any better."


Yields climbed earlier in the session as investors assessed comments from Federal Reserve officials for guidance on the timing of a possible rate hike.

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Speaking on regulatory reform, Fed Gov. Lael Brainard said the eight most important U.S. financial institutions may still cast too large of a shadow over the banking system and the companies could realize it's in the best interest of stakeholders to shrink.

Earlier, Minneapolis Fed President Narayana Kocherlakota spoke about U.S. fiscal policy moving forward.

"I want to be clear at the outset that I am not saying that it is appropriate for fiscal policymakers to increase the long-run level of public debt," Kocherlakota said, according to Reuters. "I am simply pointing to one benefit associated with such an increase: It allows the central bank to be more effective in mitigating the impact of adverse shocks to aggregate demand."

On Friday, Fed Chief Janet Yellen also gives a speech on the economy.

Janet Yellen
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"The minutes of the mid-June FOMC (Federal Open Market Committee) meeting revealed that the Fed was still on track to begin raising interest rates later this year, probably in September, but more recent developments—Greece, China and June's Employment Report—mean that it would be wrong to read too much into what officials were thinking three weeks ago," analysts at Capital Economics said in an note.

"Fed Chair Janet Yellen will be speaking on the economic outlook this Friday, and then will deliver her semiannual congressional testimony next Wednesday/Thursday. Markets will put a lot more weight on what she has to say now, particularly if Greece is booted out of the euro zone this weekend," they added.

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Weekly jobless claims came in higher than expected at 297,000, the Labor Department said.

Treasury yields fell across the curve Wednesday after minutes from the Fed's last meeting showed policymakers keen to see further signs of strength in the U.S. economy before raising interest rates.

—Reuters and CNBC's Dhara Ranasinghe contributed to this report.