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US Treasury yields slightly lower after 7-year note sale

Bond traders at CME Group
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U.S. Treasurys traded slightly higher on Thursday after a Treasury Department sale.

The Department auctioned $28 billion in seven-year notes at a high yield of 2.335 percent on Thursday. The bid-to-cover ratio, an indicator of demand, was 2.45, the lowest since last August.

Indirect bidders, which include major central banks, were awarded 72.8 percent, the highest on record, according to Reuters. Direct bidders, which includes domestic money managers, bought 6.6 percent.

The yield on the seven-year note yield traded around 2.30 percent following the sale.

"After yesterday's soft 5 yr note auction, the 7 yr note auction was a mixed bag but 2 of the 3 components that markets focus on were slightly better," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.

"Bottom line, in light of the Treasury weakness this week leading up to the auction and the sharp selloff we saw in European sovereign bonds today, the market was set up for a disappointing auction. Not getting it has resulted in a bounce in prices and a drop in yields to little changed on the day," Boockvar said.


Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
---
US 10-YR
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US 30-YR
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U.S. government debt prices had chopped around breakeven heading into the sale.

The yield on the benchmark 10-year Treasury note was lower at around 2.512 percent, while the yield on the 30-year Treasury bond was also slightly lower at 3.095 percent. Yields move inversely to prices.

In economic news, initial jobless claims jumped 22,000 to 259,000, but have remained below 300,000 for 99 weeks straight, their longest stretch since 1970.

The U.S. IHS Markit services PMI showed the sector expanded at its fastest pace since 2015, hitting 55.1 from 53.9. "Anecdotal evidence suggested that stronger domestic demand and improving business confidence had led to a robust rise in service sector activity at the start of 2017," IHS Markit said. New home sales fell 10.4 percent in December.

In oil markets Thursday, Brent crude was around $56.21 a barrel, up 2.05 percent, while U.S. crude settled at $53.78 a barrel, up 1.95 percent.