Treasurys spike, then dive after Fed minutes

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

Treasurys briefly turned positive on Thursday after the Federal Reserve released minutes from its Sept. 16-17 meeting.

The minutes showed the central bank's policymaking committee was unsettled by signs of a global economic slowdown but didn't think this had "materially altered" the outlook for the economy.

"Nevertheless, in part because of the risks to the outlook for economic activity and inflation, the committee decided that it was prudent to wait for additional information," the Fed said in the minutes.

Shorter-dated yields, which move in the opposite direction of prices, tumbled after the announcement, before rallying higher. The yield on the benchmark 10-year Treasury note was up 5 basis points at 2.11 percent, while the yield on the 30-year Treasury bond rose 6 basis point to 2.95 percent.

At the day's high, the 10-year note yield rose to 2.1182 percent, its highest level since Sept. 29. Meanwhile, the five-year note yield hit its highest since Sept. 30 at 1.414 percent.

Many market analysts expected the Federal Reserve to raise short-term interest rates for the first time in nearly a decade at its September meeting. The central bank's decision to hold off on a hike caused great uncertainty in markets about the Fed's view on domestic and global economic conditions.

Earlier, the Treasury Department auctioned $13 billion in 30-year bonds at a high yield of 2.914 percent. The bid-to-cover ratio, an indicator of demand, was 2.46, compared to an average of 2.35.

Indirect bidders, consisting of major central banks across the globe, were awarded 56.4 percent, compared to the 52 percent average. Direct bidders, which includes domestic money managers, bought a little more than usual, taking 15.5 percent of the pile, versus a recent average of 12 percent.


On the data front, weekly jobless claims came in at 263,000, below the expected 273,000. Thursday will also see $13 billion of 30-year bonds auctioned.

—Reuters contributed to this report