Treasury prices jump following strong demand at auction for 30-year bonds

Treasury prices surge on strong demand at auction

NEW YORK — Treasury prices surged Thursday, sending their yields lower, after another successful auction of long-term government debt.

Treasurys started the day moderately higher and shot up after a $12 billion auction of 30-year bonds was met with strong demand from investors.

“Auctions so far this week have gone very well,” said Bill Bemis, portfolio manager at Aviva Investors.

In late trading, the price of the 30-year bond rose 2 9/32 to 105 3/32, pushing its yield down to 4.20 percent from 4.33 percent late Wednesday.

The bid-to-cover ratio, a measure of demand, was 2.92, significantly higher than the 2.54 during an auction last month for bonds of the same length.

Indirect bidders, an indicator of demand from foreign investors, was 46 percent, in keeping with the relatively high levels of recent months. Bond investors often worry that demand for Treasurys from key foreign buyers such as China’s government could wane.

The price of the benchmark 10-year note rose 1 2/32 to 102 9/32, sending its yield down to 3.35 percent from 3.48 percent. The yield on the 10-year note is closely tied to rates on consumer loans such as mortgages.

Investors’ appetite for Treasurys has been strong in recent weeks despite long-term concerns that the government’s record-setting pace of debt issuance could overwhelm the market. Bonds had stumbled in June after some auctions showed weakening demand, but subsequent debt sales have gone much better.

Thursday’s auction of 30-year bonds followed strong auctions for $38 billion in three-year notes and $20 billion in 10-year notes earlier in the week.

The three-year note rose 5/32 to 99 26/32, and its yield fell to 1.44 percent from 1.49 percent.

In other trading, the price of the two-year note rose rose 2/32 to 100 6/32 and its yield fell to 0.90 percent from 0.93 percent.

The yield on the three-month T-bill was flat at 0.13 percent. Its discount rate was 0.14 percent.

The cost of borrowing between banks was flat. The British Bankers’ Association said the rate on three-month loans in dollars — the London Interbank Offered Rate, or Libor — was unchanged at 0.30 percent.