Treasury Department auctions $21B of 10-year notes at a high yield of 2.235%


The Treasury Department auctioned $21 billion in 10-year notes at a high yield of 2.235 percent on Wednesday. The bid-to-cover ratio, an indicator of demand, was stronger than the recent average at 2.70.

Benchmark 10-year note yields pared gains after the announcement. The yield on the benchmark 10-year note turned flat to trade at 2.19 percent, off an earlier high of 2.25 percent. The yield on a bond rises when its price falls. Thirsty-year bond yields also rose to trade above 3 percent.


Bond yields were flat across the curve, with the two-year note yielding 0.74 percent after briefly rising to an April 2011 high of 0.7689 percent.

Adding to the soft tone in the U.S. bond market was the firm tone in global stock markets, which dented the appeal of so-called safe-haven assets such as U.S. Treasurys and German Bunds.

"The stabilisation of and recovery in equity and emerging markets this week has provided some relief for risk, while hurting Treasurys," analysts at Societe Generale said in a note.

"We see Tuesday's 7 basis point sell-off in the 10-year Treasury (to 2.19 percent) as an unwinding of the oversized rally that we saw at the end of last week," they added.

Global markets have been particularly volatile in recent weeks, with concerns about an economic slowdown in China and jitters about a potential rise in U.S. interest rates hurting stocks and emerging markets.

On the data front, the Job Openings and Labor Turnover Survey (JOLTS) showed the highest job openings number on record at 5.8 million.

The key non-farm payrolls report on Friday reinforced expectations that the jobs market is strong enough to weather a rise in U.S. interest rates – possibly when the Federal Reserve meets next week.

CORRECTION: A previous version of this story misstated two-year note yields rose above 0.76 percent for the first time since April 2011.