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Treasury Investors Retreat From Auctions in Face of Rising Rates

  • Last three coupon note sales of 2015 draw weak buyer interest
  • Fed officials expect to lift interest rates four times in 2016

The Treasury’s final three auctions of coupon-bearing notes this year drew some of the lowest investor demand since the financial crisis with the Federal Reserve on course to raise interest rates several times next year, potentially lowering the value of the debt.

At a seven-year note sale Wednesday, short-staffed desks compounded the challenge the U.S. faced in selling $29 billion of the securities as investors bid for the lowest amount since March even at the highest yields since September 2014. Demand at auctions of two-year notes and five-year notes earlier in the week drew the least interest since 2009 as measured by the bid-to-cover ratio.