November 23, 2017
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Funds Buy Fewest U.S. 10-year Notes at Auction Since 2014

(Reuters)


NEW YORK - Large investment managers bought the fewest U.S. 10-year Treasury notes at an auction since November 2014, while they purchased nearly the same amount of 30-year Treasury bonds as they did in November, Treasury data released on Thursday showed.

Their latest purchases occurred prior to the Federal Reserve's expected decision on Dec. 14 to raise interest rates by a quarter point to a target range of 0.50 percent to 0.75 percent.

Fed policy-makers hinted they might raise interest rates as many as three times in 2017 if the U.S. jobs market improves further and inflation moves closer to its 2 percent goal.

Longer-dated Treasury yields had reached their highest levels since September 2014, propelled by bets of faster growth and inflation from fiscal stimulus under a Trump administration.

The U.S. Treasury Department awarded investment funds $7.839 billion of the $20 billion in the 10-year note auction it offered on Dec. 12, which was the lowest amount since November 2014.

This compared with the $9.205 billion of 10-year note supply it awarded to this group in November.

The 10-year notes were sold at a yield of 2.485 percent, the highest at an auction since September 2014.

Investment funds bought $7.389 billion of the $12 billion 30-year bonds offered on Dec. 13. This compared with $7.935 billion the prior month, according to Treasury data.

The 30-year bonds were sold at a yield of 3.152 percent, a level not seen since September 2014.

Overseas investors, another major group of holders of U.S. government debt, bought $4.077 billion of the latest 10-year supply, which was the most they bought a 10-year auction since August. They purchased $3.018 billion in 10-year notes in November.

Foreign investors bought $925 million of 30-year bonds, down from $1.668 billion the prior month and the least since September.

(Reporting by Richard Leong; Editing by Chizu Nomiyama)