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Treasuries Little Changed Before $21 Billion 10-Year Auction

Treasuries were little changed, holding yesterday’s biggest gain in almost a week, before the U.S. sells $21 billion of 10-year notes today and $13 billion of 30-year bonds tomorrow.

U.S. government securities advanced yesterday after an increase in yields lured investors. Ten-year yields were as high as 2.29 percent, a level not seen since April 2012. A three-year sale yesterday drew the weakest bidding in 2 1/2 years.

“There’s some value in 10s and 30s compared to the inflation rate,” said Kazuaki Oh’e, a debt salesman in Tokyo at CIBC World Markets Japan Inc., a unit of Canada’s fifth-largest lender.

Benchmark 10-year notes yielded 2.2 percent as of 10:18 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 1.75 percent security maturing in May 2023 was 96 1/32. Thirty-year yields increased one basis point, or 0.01 percentage point, to 3.33 percent.

The U.S. personal consumption expenditure deflator, the Fed’s preferred gauge of inflation, rose 0.7 percent in April from a year earlier, the smallest increase since 2009, based on Commerce Department data.

Japan’s 10-year rate was unchanged at 0.88 percent. It has declined from this year’s high of 1 percent set in May.

The U.S. sold $32 billion of three-year notes yesterday at a yield of 0.581 percent. A Bloomberg News survey of traders before the auction projected 0.575 percent.

The amount of bids at the offering relative to debt sold, a gauge of demand known as the bid-to-cover ratio, was 2.95, the weakest since December 2010.

To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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