By Dow Jones Business News,
December 12, 2013, 01:45:00 PM EDT
By Carolyn Cui
By U.S. Treasurys remained under pressure on Thursday after a lackluster 30-year bond auction, as investors shied away
from taking on the new debt ahead of the Federal Reserve's meeting next week.
In early afternoon trade, the benchmark 10-year note fell 7/32 in price, yielding 2.872%, according to Tradeweb. The
30-year bond lost 6/32 in price to yield 3.890%. Bond yields fall when prices rise.
Bonds from the $13 billion offering sold at a 3.900% yield, the highest rate since a 4.198% rate was offered in July
2011. Buyers submitted $2.35 in bids for every dollar of debt being auctioned off, below the $2.38 average over the past
four reopening sales, according to CRT Capital Group LLC.
Direct bidders, comprising mostly domestic banks and investment funds, purchased 12.5% of the bonds, compared with an
average of 17% at the last four reopenings. But indirect bidders, often a reflection of overseas demand, took 46% of the
total sale--the highest proportion since April 2011.
Treasury prices were already lower after an earlier report showed American shoppers spent more in November than
economists predicted, buoying the prospects of steady economic growth for the fourth quarter.
The Commerce Department Thursday reported retail sales rose 0.7% last month, the sharpest increase since June and
beating the 0.6% rise forecast by economists. The jump in November retail sales signals a strong start to the crucial
holiday shopping season, offering hope that American consumers, who account for two-thirds of economic output, could be
gaining more solid footing.
"Further rise in interest rates will primarily be driven by the economic data, not by changes to the Fed's QE [
quantitative easing] program," said Bill Irving, a portfolio manager of government bonds and mortgage debt at Fidelity
Thursday's stronger data came days ahead of the Federal Reserve's meeting on Dec. 17 and 18, when the officials are
expected to debate whether they should start winding down its monthly $85 billion bond-buying program.
Write to Carolyn Cui at firstname.lastname@example.org
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