Treasurys higher after auction
Prices remain up after the government sells $15 billion worth of 30-year bonds. Weak retail sales data boosts demand for safe-haven assets.
 |
| Click the chart for current bond prices and yields. |
NEW YORK (CNNMoney.com) -- Treasury prices rose Thursday after the government sold $15 billion worth of 30-year bonds and a pair of weaker-than-expected economic reports vied with the Federal Reserve's more optimistic outlook.
The government said it received bids totaling $38 billion at Thursday's auction. That made for a bid-to-cover ratio of 2.54, compared with a long-time average of 2.25. A ratio above 2 is generally considered a reflection of healthy demand.
Indirect bidders, which include foreign central banks, bought 46% of the bonds. At May's auction of 30-year bonds, indirect bidders bought 33% of the offered amount.
The Treasury Department recently changed how it classifies indirect bidders and analysts say it's now harder to gauge participation by foreign buyers.
Thursday's auction was the last of three held this week totaling a record $75 billion. The government sold $23 billion worth of 10-year notes Wednesday and $37 billion worth of 3-year notes on Tuesday.
While participation at this week's auctions was above average, many traders worry that demand for Treasurys could be wearing thin as the government continues to flood the market with new issues. That could make it harder for the U.S. to finance its budget deficit and maintain its efforts to revive the ailing economy.
Meanwhile, dour economic reports on retail sales and weekly jobless claims countered a more optimistic outlook issued by the Federal Reserve on Wednesday and boosted demand for the safety of U.S. debt.
Retail sales fell 0.1% last month, reversing direction after two consecutive months of gains, the Commerce Department said. Economists surveyed by Briefing.com had expected sales to increase 0.7% in July.
Another government report showed initial claims for unemployment benefits rose by 4,000 last week to 558,000. But the Labor Department report also showed the number of people filing ongoing claims declined in the most recent week.
On Wednesday, the Federal Reserve said it will slow its purchases of Treasurys and wind down its $300 billion buyback program in October to help facilitate a "smooth transition in the market."
The U.S. central bank also held interest rates near historic lows and said "economic activity is leveling off."
Stocks recovered from earlier losses Thursday as investors weighed downbeat economic data against the Fed's outlook and news that economic growth had resumed in France and Germany during the second quarter.
Bond prices: The benchmark 10-year note was up 21/32 to 99-26/32, and its yield was 3.67%.
The 30-year bond rose 1-26/32 to 97-4/32 after the auction. Its yield sank to 4.43%, from 4.53%. The median yield at Thursday's auction was 4.48%.
The 2-year note gained 4/32 to 99-26/32. Its yield was 1.09%.
The yield on the 3-month bill was 0.18%. 
