NEW YORK (CNN/Money) -
Treasury prices rallied late Wednesday after an auction of two-year government debt drew surprisingly strong demand, countering worries that a drop in the dollar would make U.S. assets less attractive.
At around 5 p.m. ET, the benchmark 10-year Treasury note gained 18/32 of a point in price to 100-28/32, yielding 4.14 percent, down from 4.21 percent late Tuesday.
The 30-year bond jumped nearly a full point to 105-3/32, its yield dipping to 5.03 percent from 5.09 percent late Tuesday. Bond yields and prices move in opposite directions.
The five-year note added 8/32 of a point to 100-10/32, yielding 3.06 percent. The two-year note gained 4/32 of a point to 100-23/32, yielding 1.60 percent.
The sale of $25 billion in new two-year Treasury notes went at a lower-than-expected yield of 1.695 percent and drew bids for a better-than-expected 2.2 times the amount on offer, easily beating the 1.79 average of the previous four sales.
Just as important, indirect bidders, which mainly comprise foreign central banks, picked up 37 percent of the issue, easily beating the lowly 27 percent bought at the last sale and above the 34 percent average of the previous four.
In currency markets, the dollar stayed above its recent three-year low of ¥110.93, hit during the day Tuesday, but still trended lower.
The greenback bought ¥111.70, down from ¥112.26 late Tuesday. The dollar also slipped versus the euro, which rose to $1.1495 from $1.1446 late Tuesday.
Weekend comments from the Group of Seven (G7) major industrial nations, calling for more exchange rate flexibility as a means to help iron out global economic imbalances, continued to weigh on the dollar. Markets viewed the statement as criticism of persistent intervention by Asian countries, particularly China and Japan, to keep their currencies weak for the benefit of their export markets.
Ahead of the successful sale of the two-year notes, traders said there was worry that the widening of exchange rates could hurt U.S. bonds, since Asian central banks have been massive buyers of Treasurys and agency debt in recent years. Traders said there are concerns that they may scale back their purchases of U.S. debt.
Meanwhile, the Mortgage Bankers Association of America said Wednesday its seasonally adjusted gauge of overall mortgage requests fell to 699.6 for the week ended Sept. 19, down 3.7 percent from the previous week's 726.7.
After a quiet few days, economic data gets cranked up on Thursday with August durable goods orders, as well as new and existing home sales. Friday brings final GDP figures for the second quarter and the University of Michigan's final consumer sentiment reading for September.
-- from staff and wire reports
|