US bond prices rise as markets look to Yellen

US bond prices rise as markets look to Yellen

U.S. Treasurys extended gains on Wednesday after Janet Yellen, President Barack Obama’s nominee to chair the Federal Reserve, said the U.S. central bank has “more work to do” to help an economy and labor market that are still underperforming.

“I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy,” she said in remarks prepared for delivery to the U.S. Senate Banking Committee on Thursday.

Benchmark 10-year notes were up 19/32 in price, yielding 2.705 percent. The 30-year bond was 20/32 higher in price with a yield of 3.825 percent.

U.S. 10-Year notes were auctioned at a 2.750 percent coupon with a bid-to-cover 2.70 on Wednesday. The $ 24 billion auction of 10-year notes was the second leg of the Treasury’s $ 70 billion quarterly refunding this week. Indirect bidders bought 47.67 percent of the latest 10-year note supply, the biggest share since June.

The 10-year note sale followed Tuesday’s solid $ 30 billion three-year debt offering, which fetched the strongest bidding since March. The U.S. Treasury will complete this week’s refunding with a $ 24 billion 30-year bond sale on Thursday.

“The market seems pretty well set up for the auctions. That’s giving people some confidence,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.

Weaker global equity prices also rekindled some safe-haven bids for Treasuries, whose yields retreated from eight-week highs set on Tuesday.

Benchmark yields had spiked higher last Friday in reaction to data that showed surprisingly strong domestic job growth in October despite a 16-day federal government shutdown.

—By Reuters

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