US Bond Market: Treasuries Decline as 20-Year Bond Auction Sees Weak Demand
U.S. Treasury bonds fell on Wednesday, with yields on long-term Treasuries reaching intraday highs after a weak demand at the 20-year bond auction. Expectations of possible U.S. military intervention in Iran pushed up oil prices and also influenced Treasuries.
In late trading, yields on Treasuries of various maturities rose by 2-3 basis points during the day, with little change in yield spreads.
Economic data released in the U.S. morning session, including December durable goods orders, new housing starts, and January industrial production, all exceeded expectations, leading to higher yields.
WTI crude oil futures gradually climbed intraday, closing up 4.6%, approaching the upper end of the range since early August.
At 1:00 pm New York time, the winning yield at the 20-year bond auction was 4.664%, 2 basis points higher than the pre-auction trading level at the bid deadline, with weak bidding indicators; the allocation ratio for primary dealers was 17.6%, the highest level since December 2024, while the allocation ratio for indirect bidders fell to 55.2%, the lowest since 2021.
The minutes of the Federal Open Market Committee (FOMC) meeting released at 2:00 pm New York time had little impact on the market-implied expectations for rate cuts. The market is betting that the Federal Reserve will cut rates twice by the end of the year, each time by 25 basis points, although the minutes indicated that “several” policymakers believe that if inflation does not ease, further rate hikes may be appropriate.
As of 3:54 pm New York time, the yield on the U.S. 2-year Treasury note was 3.4658%.
The yield on the U.S. 5-year Treasury note was 3.6539%.
The yield on the U.S. 10-year Treasury note was 4.0865%.
The yield on the U.S. 30-year Treasury note was 4.7118%.
The spread between the U.S. 2-year and 10-year Treasury yields was 61.866 basis points.
The spread between the U.S. 5-year and 30-year Treasury yields was 105.615 basis points.
Editor: Li Tong
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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