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TREASURIES-Yields advance as investors look to debt auction
September 11, 2017 / 2:30 PM / a month ago

TREASURIES-Yields advance as investors look to debt auction

NEW YORK, Sept 11 (Reuters) - U.S. Treasury yields rose on Monday after a generally quiet weekend unmarred by negative news out of North Korea, with investors looking ahead to this week’s auction of government debt.

U.S. long-dated yields, including those on two-year and three-year notes, climbed to one-week peaks.

“We opened lower overnight because there’s nothing new out of North Korea,” said Justin Lederer, Treasury analyst, at Cantor Fitzgerald in New York.

“There has been good selling in futures and people are looking to this week’s supply. Given where the yields are, I think people are comfortable owning the securities with higher yield.”

Traders tend to sell Treasuries to bump up the yield so they can buy it at a lower price at the auction in a practice known as concession.

Treasury will auction $56 billion in debt this week: $24 billion in U.S. three-year notes later in the session, $20 billion in 10-year notes on Tuesday, and $12 billion in 30-year bonds on Wednesday.

In mid-morning trading, benchmark 10-year Treasury yields rose to 2.111 percent, from 2.061 percent late on Friday. Ten-year yields earlier rose to 2.118 percent, a one-week high.

U.S. 30-year bond yields rose to 2.724 percent, up from 2.680 percent the previous session. Thirty-year yields climbed to one-week peaks of 2.729 percent.

Ahead of the auction, U.S. three-year note yields were up at 1.417 percent, from 1.38 percent late on Friday.

Recent three-year auctions have yielded mixed results.

TD Securities in a research note said that while the auction may be “less attractive” on an outright yield basis, the note has cheapened on the curve. It added that the note could fetch a slightly higher yield than expected at this afternoon’s auction, based on recent averages.

“We’re 3-1/2 basis points higher in yields on the 3-year from Friday’s close. That’s a decent concession,” said Cantor’s Lederer. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith Mazzilli)

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