Yields Recover Some Ground Ahead Of Next Week’s Auctions By Investing.com

Dhirendra Tripathi

Investing.com – Breaking an eight-day falling streak, bond yields bounced back on Friday as traders pared long positions ahead of next week’s auction of $62 billion of government debt.

Spiking prices for U.S. Treasuries have sent yields to five-month lows, puzzling many experts at a time when fears of a sustained rise in inflation are still strong. Bond yields and prices are inversely related.

The United States 10-Year was up 5 basis points to 1.34% while the United States 30-Year rose 6 basis points to 1.97%. The yield on the United States 5-Year, more sensitive to expectations of short-term interest rate changes, was higher by 3 basis points to 0.77%.

One basis point is one-hundredth of a percent.

Monday will see auction of $38 billion in 10-year notes and Tuesday $24 billion in 30-year bonds.

Zachary Griffiths, macro strategist at Wells Fargo (NYSE:WFC), told Reuters that current yields, which are at “much-less attractive levels” than during June auctions, could pose a headwind for demand after an “almost insatiable” duration bid by investors for longer-term debt over the last couple of weeks.

June auctions resulted in high yields of 1.49% for 10-year notes and 2.17% for 30-year bonds.

“There is still an enormous amount of cash in the market, an enormous amount of demand for Treasuries, and given the ongoing concerns about where global growth will go, given the continued rise in coronavirus cases in many areas of the world particularly with the Delta variant, I think the safe-haven demand for Treasuries will remain with us for the foreseeable future,” John Canavan, lead analyst at Oxford Economics, told Reuters.