Long-dated yields inched toward positive territory on Wednesday after the government's auctions of U.S. 10-year notes met a lukewarm reception. The results came after China moved to devalue its currency for a second day in a row, following its surprise decision on Tuesday.
The Treasury Department auctioned $24 billion in 10-year notes at a high yield of 2.115 percent—the lowest yield since April. The bid-to-cover ratio, an indicator of demand, was 2.40 and well below the recent average of 2.67.
The tepid demand could be an indication that we could begin to establish the lower end of the 10-year rate range of about 2.1 percent on the downside and 2.5 percent on the upside, according to Peter Boockvar, chief market analyst at the Lindsey Group.
Indirect bidders, which include major central banks, were awarded 60.1 percent, well above the 55 percent average. Direct bidders, which includes domestic money managers, brought 5.8 percent, versus a recent average of 11 percent.
The yield on the benchmark 10-year Treasury note recovered a bit after the announcement to trade down 3 basis points to 2.11 percent.