Wednesday, December 29, 2010

Treasuries Drop as Five-Year Note Sale Attracts Lowest Demand Since June

Treasuries tumbled, pushing benchmark 10-year note yields up the most in two weeks, after the $35 billion sale of five-year securities attracted the lowest demand since June.

U.S. debt due in more than a year was headed for the biggest monthly loss in the global government bond market as primary dealers ended up with their biggest share of an auction of the five-year maturity since July 2009. The two-year note yield increased to the highest level in six months.

“Foreigners weren’t as aggressive at the sale as usual, leaving a lot for primary dealers,” said Jason Rogan, director of U.S. government trading in New York at Guggenheim Partners LLC, a brokerage for institutional investors. “It’s not looking good for the seven-year auction tomorrow.”

The yield on the current five-year note increased 12 basis points, or 0.12 percentage point, to 2.15 percent at 5 p.m. in New York, according to BGCantor Market Data. The price of the 1.375 percent security maturing in November 2015 fell 18/32, or $5.63 per $1,000 face amount, to 96 13/32. (more)

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