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TheStreet Open House

Treasuries Trade Firmly After Auction: Market Bits


NEW YORK ( TheStreet) -- Treasury bonds traded firmly on optimism about the treasury market after a lukewarm reception of the government's seven-year notes auction Wednesday.

The treasuries had yields of 2.895%, the highest in months and more attractive to buyers than the 2.873% yields dealers were forecasting on average, according to a Bloomberg survey.

The two-year note was rising 2/32, pushing the yield down to 0.801%, the 10-year note was gaining 8/32, pushing the yield down to 3.459% and the 30-Year bond was up 6/32, lowering the yield to 4.526%.

"Another mixed takedown with a sizable tail, but above average non-dealer bidding of 58.2% vs. the 57.8% norm," is how CRT Group fixed-income strategist Ian Lyngen described the auction. "Since the results, Treasuries have continued to hold the price action."

The weaker the demand in a treasury auction, the wider the tail or difference between the average bid and the lowest bid at a Treasury auction.

The $29 billion sale of seven-year notes concludes the government's $99 billion of treasury sales this week. On Tuesday, the five-year auction showed mixed results, while Monday's two-year auction was described as "mediocre" by Stifel Nicolaus head government bond trader Marty Mitchell.

iShares Barclays 7-10 Year Treasury Bond Fund (IEF) was rising 0.3% to $93.16, the iShares Barclays 1-3 Year Treasury Bond Fund (SHY) was flat at $83.81 and the iShares Barclays 20+ Year Treasury Bond Fund (TLT) was 0.5% higher at $92.

Treasuries were also gaining with the ADP National Employment Report's indication that the private sector added 201,000 jobs in March -- lower than the 210,000 jobs economists were expecting, according Briefing.com. The market was also keeping a close on the Fed policymakers' debate on the next move on monetary policy.

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