{"id":47355,"date":"2023-08-11T17:33:32","date_gmt":"2023-08-11T21:33:32","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/treasury-auctions-end-on-a-downbeat-note-this-week-after-soft-30-year-sale\/"},"modified":"2023-08-11T17:33:34","modified_gmt":"2023-08-11T21:33:34","slug":"treasury-auctions-end-on-a-downbeat-note-this-week-after-soft-30-year-sale","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=47355","title":{"rendered":"Treasury auctions end on a downbeat note this week after soft 30-year sale"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002390926\" role=\"document\">\n<p>The Treasury market ended the week on a somewhat downbeat note after struggling to absorb Thursday\u2019s $23 billion auction of 30-year bonds despite a record pace of investor inflows. <\/p>\n<p>Demand for the auction was described by strategists and traders as \u201cso-so,\u201d \u201csoft\u201d and \u201cweaker-than-expected.\u201d Thursday\u2019s disappointing sale overshadowed July\u2019s consumer-price report and was the main reason that investors and traders sold off long-dated Treasurys that same afternoon.<\/p>\n<p>The selloff in long-dated U.S. government debt extended into Friday \u2014 pushing the 10-year yield<br \/>\n        BX:TMUBMUSD10Y<br \/>\n       and 30-year rate<br \/>\n        BX:TMUBMUSD30Y<br \/>\n       to one-week highs of 4.166% and 4.271%, respectively \u2014 and comes at a time when Treasurys are on track for what BofA Securities strategists see as a record $206 billion of inflows this year. Greater inflows should be pushing yields lower, not higher, but that\u2019s not happening. Instead, yields are rising anyway.<\/p>\n<div class=\"paywall\">\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<p>          <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>Demand\/supply dynamics in the Treasury market have recently changed and \u201cthe balance of power seems to be shifting in favor of higher yields\u201d at a time of \u201crunaway\u201d government deficits and increases in Treasury\u2019s debt issuances, said Marios Hadjikyriacos, a senior investment analyst at Cyprus-based multiasset brokerage XM. <\/p>\n<p>In a note on Friday, the analyst said that the soft 30-year Treasury\u00a0auction\u00a0\u201ccertainly reinforced this notion yesterday, helping to propel yields higher,\u201d alongside commentary from San Francisco Fed President Mary Daly, who said the central bank has more work to do to get inflation down.<\/p>\n<p>This week\u2019s government auctions were seen as a key test as to whether investors could keep up their demand for U.S. government debt amid a deluge of issuance and worries about the fiscal outlook. However, liquidity during August tends to be low so Thursday\u2019s poorly received 30-year sale is not necessarily indicative of further trouble ahead, considering Wednesday\u2019s\u00a0$38 billion auction\u00a0of 10-year notes and Tuesday\u2019s sale of $42 billion in 3-year notes both went well, according to analysts.<\/p>\n<p>On July 31, the Treasury Department released an eye-popping\u00a0$1 trillion borrowing estimate\u00a0for the third quarter, which was followed the next day by Fitch Ratings\u2019 decision to cut the government\u2019s top AAA rating. Worries about the trajectory of U.S. finances then spilled into Thursday\u2019s 30-year bond auction.<\/p>\n<p><strong>Read:<\/strong> How Fitch downgrade might impact Treasury\u2019s $1 trillion third-quarter borrowing plans <\/p>\n<p>\u201cThe technical picture of the Treasury market heading into auctions this week was weak, and it\u2019s not terribly good right now in the long end after the 30-year sale,\u201d said Gregory Faranello, head of U.S. rates for AmeriVet Securities in New York. \u201cThe auction wasn\u2019t bad, it just wasn\u2019t as strong as the three-year or 10-year sales on Tuesday and Wednesday.\u201d<\/p>\n<p>At a time when the fiscal outlook looks worrisome, Federal Reserve policy makers are raising interest rates and shrinking the central bank\u2019s $8.2 trillion balance sheet. In other words, the Fed, long seen as an important buyer of Treasurys which isn\u2019t price-sensitive, \u201chas gone away and the buyers left now are more price sensitive,\u201d Faranello said via phone. <\/p>\n<p>\u201cIf we put all these factors into a blender, for the first time in 10 to 15 years they\u2019re all pointing in the same way and that\u2019s pressure on yields regardless of the inflows that come and go,\u201d he said, adding that even financial-stability issues in March weren\u2019t enough to keep Treasury rates down.  \u201cUltimately, the only reasons that yields would go lower from here is weak economic data, which we don\u2019t have, or central bank policy which changes course. The stars are aligning the other way not just here in the U.S., but globally.\u201d<\/p>\n<p>The yield awarded at Thursday\u2019s 30-year auction was higher than what it was going into the competitive deadline, which means demand wasn\u2019t great. In addition, primary dealers were awarded a higher percentage of the allotment than last month, meaning \u201cpeople on the sidelines didn\u2019t show up or have much interest,\u201d said macro strategist Will Compernolle of FHN Financial in New York. The poor reception \u201cseemed to surprise most people and I think it\u2019s carried on into today.\u201d <\/p>\n<p>On Friday, traders and investors continued to sell off most Treasurys after July\u2019s producer-price report surprised to the upside. Two-, 10- and 30-year yields all ended the week higher. Meanwhile, U.S. stocks finished mostly lower, with the S&amp;P 500<br \/>\n        SPX<br \/>\n       and Nasdaq Composite<br \/>\n        COMP<br \/>\n       down for the day.<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/treasury-auctions-end-on-a-downbeat-this-week-after-soft-30-year-auction-3f5d811f?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Treasury market ended the week on a somewhat downbeat note after struggling to absorb Thursday\u2019s $23 billion auction of 30-year bonds despite a record pace of investor inflows. Demand for the auction was described by strategists and traders as \u201cso-so,\u201d \u201csoft\u201d and \u201cweaker-than-expected.\u201d Thursday\u2019s disappointing sale overshadowed July\u2019s consumer-price report and was the main [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":47356,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-47355","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Treasury auctions end on a downbeat note this week after soft 30-year sale | iFintechWorld<\/title>\n<meta name=\"description\" content=\"The Treasury market ended the week on a somewhat downbeat note after struggling to 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