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U.S. Treasury yields ended largely where they started in Wednesday’s choppy session with investors showing little trouble absorbing a large auction for government paper.
What are Treasurys doing?
The 10-year Treasury note rate
BX:TMUBMUSD10Y
rose 0.4 basis point to 1.566%. The 2-year note yield
BX:TMUBMUSD02Y
held their ground at 0.149%, while the 30-year bond yield
BX:TMUBMUSD30Y
traded up 0.5 basis point to 2.264%.
What’s driving Treasurys?
Despite the pent-up anticipation about a $24 billion auction for long-dated U.S. Treasury bonds Wednesday afternoon, the sale struggled to inspire brisk trading in a largely quiet session.
Still, the results showed appetite for government bonds remained strong, amid talk that U.S. and foreign investors were heading back into Treasurys once the market stabilized in April.
Global equities markets recovered some of their losses on Wednesday, despite worries that the pandemic is accelerating in some countries. Those concerns may have fed demand for safe assets like Treasurys this month.
The Bank of Canada left interestrates unchanged, but said it would trim its asset purchases to $3 billion per month, reflecting improved economic prospects.
What did market participants say?
“Markets are questioning the pace of reopening. Reports of a declining pace of U.S. vaccinations are part of the story. It’s too early to determine whether this is the result of lumpy data, concerns about vaccine side effects, or a swift encounter with the limit of vaccine demand,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments, in e-mailed comments.
Though she noted the slide in yields may have been more driven by other factors such as the pullback in rate-hike expectations.
