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Treasuries Fall as Demand Wanes for Lowest-Ever 30-Year Yield
By Sandra Hernandez and Deborah Finestone

Feb. 7 (Bloomberg) — U.S. Treasuries declined as demand was weaker than expected at the government’s $9 billion auction of 30-year bonds, which drew the lowest yield on record.

Ten- and 30-year securities fell a second straight day as traders bet the Federal Reserve’s five interest-rate cuts since September will revive economic growth and cause inflation to accelerate.

“The auction went as poorly as one could imagine,” said Andrew Brenner, co-head of structured products in New York at MF Global Ltd., the world’s largest broker of exchange-traded futures and options contracts. “There isn’t a lot of demand for bonds at these levels.”

The yield on the new benchmark 10-year note auctioned yesterday, with a 3 1/2 percent coupon and due in February 2018, rose 16 basis points, or 0.16 percentage point, to 3.76 percent as of 2 p.m. in New York, according to bond broker Cantor Fitzgerald LP. Benchmark 10-year yields fell to a 4 1/2-year low of 3.285 percent on Jan. 23, the day after the Fed’s emergency 0.75 percentage point rate cut.

The new 30-year bond drew a yield of 4.449 percent at the auction, compared with 4.41 percent in pre-auction trading and the 4.421 percent forecast of six bond-trading firms surveyed by Bloomberg News. The new bond last traded with a yield of 4.51 percent.

Ron Peck
Sr. Vice President
Salem Five Mortgage Services
978-448-8417
978-302-8640 cell
978-498-0176 fax

Dalton