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Treasury prices rebound after bond auction

Treasury prices rebound after bond auction

Treasury prices rallied Wednesday after the government's $29 billion auction of long-term bonds exceeded expectations.
The price on the 10-year Treasury note rose $1.06 per $100 invested in afternoon trading. Its yield, which moves in the opposite direction, dropped to 3.35 percent from 3.49 percent late Tuesday.
The Treasury sold $29 billion in seven-year bonds on Wednesday. It marked the government's last note auction this year. The auction attracted strong bidding, especially from foreign central banks and the Federal Reserve.
"In other words, this was a rigged game," said Howard Simons, strategist with Bianco Research in Chicago. "The Fed didn't want a second sloppy auction in a row to end the year."
The sale follows a disappointing auction of $35 billion in five-year bonds Tuesday, which sent the price of the 10-year note down by more than $1. Investors had expected a better showing following the strong sale of $35 billion in two-year bonds Monday.
Yields mostly have been increasing since November, even after the central bank started a bond-buying program designed to lower interest rates. Investors are expecting better economic growth and higher inflation and are shifting their money into riskier investments, curbing bond prices. The yield on the 10-year note traded at as low as 2.49 percent on Nov. 4.
In other trading, the 30-year bond increased $1.94, with the yield falling to 4.41 percent from 4.53 percent the day before. The yield on the two-year Treasury note slipped to 0.66 percent from 0.75 percent.


Updated : 2021-03-09 00:51 GMT+08:00