Treasury Department auctions $16 billion of 30-year bonds at a high yield of 2.880%

Traders in the 10-year bond options pit at the Chicago Board of Trade signal orders.
Frank Polich | Reuters

Treasury yields held gains on Thursday after the government sold $16 billion in 30-year bonds at the lowest yield since April.

The Treasury Department auctioned the bonds at a high yield of 2.880 percent. The bid-to-cover ratio, an indicator of demand, was 2.26, versus an average of 2.34.

This follows Wednesday's $24 billion auction in 10-year notes at a yield of 2.115 percent, which was the lowest yield since April for that maturity as well.

The share of indirect bidders, which include foreign central banks, rose slightly to 51.9 percent, from 51.08 percent at last month's offering. That was around the recent average of 50 percent.

Direct bidders, which includes domestic money managers, brought 9.9 percent, versus a recent average of 14 percent.

The yield on the benchmark 10-year Treasury notes sat at 2.19 percent after closing at 2.13 percent on Wednesday. The yield on the 30-year Treasury note rose slightly to 2.854 percent, after closing at 2.81 percent.

Treasury yields pared some gains earlier as strong U.S. economic data increased the likelihood that the Federal Reserve would raise interest rates in September, rather than later in the year.

U.S. retail sales rebounded in July. The four-week moving average of weekly jobless claims fell to its lowest since April 2000, pointing firmly to a tightening jobs market.

While inflation remains below what the Fed would like to see, the labor markets have continued to strengthen—a key factor in the central bank's timing of a rate hike.

Investors had pared back bets of a September rate hike after China devalued the yuan on Tuesday.

Close attention will also be paid to China, with the People's Bank of China attempting to reassure markets that it will not continuously devalue the yuan.


Major U.S. stock indexes were higher in afternoon trading with the Dow, Nasdaq and S&P 500 each gaining slightly.

CNBC's Patti Domm and Reuters contributed to this report.