US bond yields hit multi-week highs

US bond yields hit multi-week highs

He Treasury bond yield of USA They rose to multi-week highs on Tuesday in a volatile session as two lackluster debt auctions raised doubts about demand for the public debt US, as investors analyze the timing of the U.S. rate easing cycle Federal Reserve (Fed), which will probably start this year.

The market of bonuses also faced a massive offer on Tuesday with the auction of $69 billion in two-year notes and $70 billion in five-year notes. In total, the Treasure sold $297 billion in bills and notes on Tuesday.

“With $297 billion in nominal supply on Tuesday between coupons and bills, I think some indigestion is to be expected,” he said. Tom Simons, Jefferies American economist in NY.

He added: “I saw a headline saying that no one wanted these bonds due to weak auction demand statistics. But at the end of the day, the returns they are still below overnight rates and the auctions generated still large hedge bids. “They weren’t the best, but we’re certainly far from worried that demand is too weak.”

Auction data

The data showed that the auction of two-year Treasury bonds was not well received, with the yield reaching its highest level since the first week of May after the sale. The maximum rate was 4.917%, higher than expected just before the offer, suggesting that buyers demanded a premium to keep the note.

The ratio offer-coveragean indicator of demand, was 2.41 times, lower than the 2.66 in April and the average of 2.70.

Meanwhile, the auction of five year bonds recorded around the same weak results. The top rate was 4.553%, higher than expected, with the Treasury offering a more attractive rate to attract buyers. The bid-to-cover ratio was 2.30 times, down from 2.47 times the previous sale and the weakest since September 2022.

In afternoon trading, the 10-year yield rose 6.5 basis points (bps) to 4.538%. Previous rose to 4.546%, the highest level since May 3. The 30-year yield gained 7.5 bps to 4.652%, after previously advancing to a 10-day high of 4.66%.

The cost effectiveness two-year, which reflects expectations of rate movements, rose 1.9 bp to 4.972%. It advanced to a around four-week high of 4.981%.

Source: Ambito

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