(Updates prices, adds data, quotes, and recasts with auction results)
Karen Brettell contributed to this article.
Reuters, NEW YORK, July 12 – Treasury rates fell on Monday, despite strong demand for new three-year and 10-year notes from the Treasury Department, and ahead of a highly anticipated inflation report on Tuesday.
The Treasury sold $38 billion in 10-year notes for a high yield of 1.371 percent, which was slightly lower than the debt’s last trading price. Demand was likely aided by the fact that yields had backed up ahead of the auction.
The US government also witnessed strong demand for a $58 billion sale of three-year notes, which sold at a high yield of 0.426 percent, only a basis point higher than where they had traded before the auction.
Following a spectacular rebound last week that brought long-dated rates to their lowest levels in five months, trading was largely unremarkable.
Investors will be watching Tuesday’s consumer price inflation statistics for any signs that pricing pressures are becoming entrenched in the economy. Recent inflation hikes, according to the Federal Reserve, are expected to be temporary.
According to Jim Vogel, an interest rate strategist at FHN Financial, there is a “lack of commitment before CPI tomorrow.” “On Friday, only retail sales are anticipated to be higher.”
Benchmark 10-year note rates were at 1.344 percent, down from 1.25 percent on Thursday, the lowest level since February 16. Thirty-year bond rates were 1.967 percent, down from 1.856 percent on Thursday, when they were at their lowest since February 2.
Core inflation is expected to have grown by 0.4 percent in June, according to economists polled by Reuters, with a year-on-year gain of 4 percent.
According to a monthly survey released on Monday by the New York Fed, consumers expect the economy to continue its quick recovery from the COVID-19 epidemic over the next year, with estimates for inflation, earnings, income growth, and spending all increasing in June.
Last week, Treasury yields fell sharply as investors concerned that job creation would be modest and that the spread of new COVID-19 variants could lead to new firm closures.
However, analysts believe that much of the move was technical, with speculators covering short contracts and putting money into Treasury exchange-traded funds (ETFs).
According to Tom di Galoma, managing director of Seaport Global Holdings in New York, many investors were caught “offsides.” “You’ve got some profit-taking going on right now,” he remarked.
Over the same time period, 10-year yields have fallen from 1.544 percent to 2.177 percent, while 30-year yields have fallen from 2.177 percent to 1.544 percent.
On Tuesday, the Treasury will sell $24 billion in 30-year bonds.
On Monday, demand for overnight loans to the Fed in exchange for Treasuries remained strong, with the Fed’s reverse repurchase agreement operation seeing $776 billion in demand.
Monday, July 12th, 9:33 a.m. in New York / 1333 a.m. in London
Price Percentage Change in Current Net Yield (bps)
0.0525 0.0532 0.000 0.0525 0.0532 0.000 0.0525 0.0532 0.000 0.0525 0.0532
0.05 0.0507 -0.005 0.05 0.0507 -0.005 0.05 0.0507 -0.005 0.05 0.0507
Note with a two-year maturity of 99-212/256 -0.004 = 0.2127
99-152/256 note with a three-year maturity 0.008 -0.3899 -0.3899 -0.3899 -0.3
100-120/256 0.7785 -0.008 -0.008 -0.008 -0.008 -0.008 -0.008 -0.008 -0.00
101.1004 -0.012 seven-year note
102-148/256 1.3443 -0.012 ten-year note
105-236/256 year bond 105-236/256 year bond 105-236/256 year bond 105-236/ 1.8906 -0.012 109-44/256 30-year bond 1.8906 -0.012 1.9671 -0.015 -0.015 -0.015 -0.015 –
SWAP DOLLAR SPREADS
Last Net Change (bps) (bps)
8.00 0.00 spread on a two-year dollar swap in the United States
The spread on a three-year dollar swap in the United States is 11.75 -0.25.
8.25 -0.25 spread on a 5-year dollar swap in the United States
-1.00 -0.75 spread on a 10-year dollar swap in the United States
-28.00 0.00 spread on a 30-year dollar swap in the United States (Editing by Sonya Hepinstall)/n
