US Treasurys hold higher after sale

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U.S. sovereign bond prices held higher Wednesday after the Treasury Department sold $29 billion in 7-year notes at a high yield of 2.013 percent.

The bid-to-cover ratio, an indicator of demand, was 2.51 versus a recent average of 2.52.

Indirect bidders, which include major central banks, were awarded 55.9 percent, slightly above a recent average of 55 percent. Direct bidders, which include domestic money managers, bought 13.5 percent, over a recent average of 12 percent.

After the sale, Treasury prices held higher. They were up on Wednesday after news that Turkey shot down a Russian warplane on the Syrian border Tuesday fueled demand for the safe haven asset and amid a series of U.S. economic data sets.

The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 1.3 percent last month after an upwardly revised 0.4 percent rise in September.

Meanwhile, the Labor Department said weekly jobless claims declined by 12,000 to 260,000 week over week. September personal income rose 0.4 percent.

But gains have been limited by a run of encouraging data that supported the view that the Federal Reserve will raise rates for the first time in almost a decade next month.


The final reading for consumer sentiment this month came in at 91.3, and new home sales rose 495,000 last month, below the expected 505,000.

Yields on 10-year Treasurys traded around 2.2324 percent on Wednesday, after closing at 2.243 percent on Tuesday.

Meanwhile, 30-year bond yields fell below the 3 percent handle to trade around 2.9928 percent after ending at 3.006 percent in the previous session.

Trader on the floor of the New York Stock Exchange.
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Wednesday's auction followed an auction of $35 billion in 5-year notes Tuesday at a high yield of 1.67 percent.

"As a result of the expected first rate hike in December, 10 Year Treasury yields are set to end at 2.32 percent by the end of the year and edge at 2.64 percent by end-2016," said senior global strategist at Oxford Economics, Bronka Rzepkowski.

Oil will also remain in focus with crude and natural gas inventories both due Wednesday.

Crude oil futures dipped on Wednesday as investors took profits after prices rallied to two-week highs in the previous session on mounting geopolitical tension in the Middle East as Turkey downed a Russian warplane.

Brent fell 7 cents to $46.05 a barrel on Wednesday. It settled up $1.29, or 2.9 percent, at $46.12 a barrel on Tuesday, after hitting a two-week high at $46.50.

U.S. crude's West Texas Intermediate (WTI) futures settled 17 cents higher at $43.04 a barrel.

Data on the housing market included weekly mortgage applications, the FHFA home price index at 9 a.m. and new home sales at 10 a.m.

Traders will also get another look at the consumer with the University of Michigan's final read on November consumer sentiment due at 10 a.m. On Tuesday, the Conference Board's consumer confidence index missed estimates and declined for a second straight month in November to 90.4.

— Reuters contributed to this report.