Bond Report: 10-year Treasury yield rises to 0.70% after weak showing for benchmark debt sale

This post was originally published on this site

Photo by BEN STANSALL/AFP via Getty Images

U.S. Treasury yields rose Wednesday as investors suffered from indigestion after a record-tying sale of 10-year notes.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.705% rose 2 basis points to 0.702%, while the 2-year note rate TMUBMUSD02Y, 0.129% was virtually unchanged at 0.145%. The 30-year bond yield TMUBMUSD30Y, 1.458% added 3.6 basis points to 1.457%.

What’s driving Treasurys?

The Treasury Department’s sale of $35 billion of new 10-year notes struggled to draw sufficient demand as analysts cited a lack of a concession, a process whereby broker-dealers push yields before the auction to ensure a successful sale.

With Treasury auctions being larger than they have ever been, slightly higher yields have been necessary to draw the interest of bond buyers.

Yields were initially lower in overnight trading after AstraZeneca reported they had paused the development of its COVID-19 vaccine candidate after one of its trial participants had an unexplained illness.

But the haven rally later petered out as equities recovered, following following the Nasdaq Composite’s COMP, +2.70% correction in the past three days in which it dropped 10% drop from a record high.

The U.S. Labor Department’s Job Openings and Labor Turnover Survey showed vacancies rose by 617,000 to 6.6 million in July.

What did market participants say?

“The long-end of the curve has been very sensitive to these increases in supply since the spring, and we expect this trend of relatively sloppy auctions (in the absence of significant market concessions) to continue,” said Thomas Simons, senior money market economist at Jefferies.