Weak demand at auction of 30-year Treasury bonds

AP News
Posted: Jan 12, 2012 4:40 PM
Weak demand at auction of 30-year Treasury bonds

A government auction of 30-year Treasury bonds drew meager interest from U.S. investors Thursday as cash flowed back into European debt. Most Treasurys ended the day nearly unchanged.

The Treasury Department sold $13 billion in 30-year bonds priced to yield 2.985 percent. At the time, similar bonds traded on the market at a yield of 2.952 percent. The higher yield at auction signals weak demand because yields rise when prices fall.

Demand for the bonds was far weaker than the average over the past four auctions, according to data from CRT Capital Group LLC. An unusually small number of the buyers were U.S. banks and money managers, CRT said.

Strong debt auctions by Spain and Italy on Thursday likely siphoned investors' cash out of the Treasury market.

Other Treasurys fell after the weak auction, mostly settling at prices just below Wednesday's. The yield on the 10-year Treasury note rose to 1.93 percent from 1.91 percent. Its price fell 19 cents for every $100 invested.

The 30-year Treasury bond also lost 19 cents per $100 invested; its yield rose to 2.98 from 2.97 late Wednesday.

The yield on the two-year Treasury note held steady at 0.23 percent. The yield on the three-month Treasury bill rose to 0.03 percent from 0.02 percent.