US Tsy’s Little Changed Ahead of +$21B Debt Sale

Treasury 10-year notes were little changed before the U.S. auctions $21 billion of the securities, the second of three debt sales this week totaling $66 billion.

The yield on the benchmark note swung between gains and losses as the Federal Reserve prepared to buy as much as $1.75 billion of Treasuries due from February 2036 to November 2042 today. Treasuries fell on Dec. 12, the date of the previous 10- year auction, as the central bank announced it would purchase $85 billion of government and mortgage debt a month to spur the economy by putting downward pressure on interest rates.

“There’s still ample demand,” said Justin Lederer, an interest-rate strategist in New York at Cantor Fitzgerald LP, one of 21 primary dealers that trade with the Fed. “Treasuries erased a lot of the losses from last week. Expectations for rates to go significantly higher” have not been realized.

Ten-year notes yielded 1.86 percent at 7:15 a.m. New York time, based on Bloomberg Bond Trader prices, after earlier rising as much as two basis points, or 0.02 percentage point, and falling one basis point. The yield jumped 20 basis points last week. The price of the 1.625 percent note maturing in November 2022 was 97 28/32.

Treasuries have handed investors a 0.6 percent loss this year through yesterday, according to Bank of America Merrill Lynch indexes. They returned 2.2 percent in 2012, the smallest annual return since 2009.

Bloomberg

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