Treasuries Stay Higher After $24 Billion U.S. 10-Year Note Sale

Treasuries remained higher as the U.S. sale of $24 billion in 10-year notes drew the lowest yield in more than a year.

The notes yielded 2.439 percent, compared with a forecast of 2.435 percent in a Bloomberg News survey of six of the Federal Reserve’s 22 primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.83, versus an average of 2.69 at the past 10 sales. Treasuries, which have gained this month as turmoil in Ukraine and the Mideast stoked haven demand, rose earlier after U.S. retail sales were little changed in July.

“Geopolitical outlook and European economic growth remain questionable,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, said in a telephone interview before the auction. This “spurs some overseas demand.”

The yield on the current 10-year note fell three basis points, or 0.03 percentage point, to 2.42 percent at 1:05 p.m. in New York, according to Bloomberg Bond Trader prices.

Indirect bidders, an investor class that includes foreign central banks, purchased 47 percent of the notes, compared with an average of 44.5 percent for the past 10 sales.

Direct bidders, non-primary-dealer investors that place their bids directly with the Treasury, purchased 15.1 percent of the notes, compared with an average of 17.8 percent at the past 10 auctions.

Note Returns

Ten-year notes have returned 7.1 percent this year, compared with a 3.6 percent gain in the broader U.S. Treasuries market, according to Bank of America Merrill Lynch indexes. The benchmark notes lost 7.8 percent in 2013, versus a 3.4 percent decline by Treasuries overall.

Today’s offering is the second of three note and bond sales this week totaling $67 billion. The U.S. sold $27 billion of three-year debt yesterday at a yield of 0.924 percent and will auction $16 billion of 30-year securities tomorrow.

The 10-year note yield slid on Aug. 8 to 2.35 percent, the lowest level since June 2013, as investors sought a haven amid conflict in Iraq, Gaza and Ukraine.

The yield erased an early increase today after a report showed U.S. retail sales were little changed amid tepid wage growth, adding to signs the world’s biggest economy will struggle to gain traction. Economists in a Bloomberg survey forecast sales would increase 0.2 percent, matching the advance in June.

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