Treasuries rose the most in six weeks as higher relative yields to Group of Seven counterparts and a strengthening dollar burnished the appeal of U.S. government securities to international investors.
The U.S. sale of $29 billion in seven-year notes attracted above-average foreign demand amid speculation the Federal Reserve will increase interest rates in 2015, while policy makers in Europe and Japan add to monetary stimulus. Benchmark 10-year notes yielded 88 basis points more than G-7 peers after the gap reached 92 on Sept. 17, the widest since June 2007. The dollar gained against 23 of 24 developing-economy currencies tracked by Bloomberg and stocks tumbled.
“The Treasury market is going up, but begrudgingly — people are being forced to buy,” said Charles Comiskey, New York-based head of Treasury trading at Bank of Nova Scotia in New York, one of 22 primary dealers that are obligated to bid in U.S. debt auctions. “The emerging-market currencies are getting hammered and stocks are getting hammered. It’s a flight-to-quality trade.”