US 30-Year Auction High Yield Slips, Demand Slightly Higher
The US Treasury’s 30-year auction hit a high yield of 1.895% on Thursday, down slightly from the 1.94% high in the previous auction, according to market reports.
The bid to cover ratio for the auction was 2.22, above the 2.20 ratio in the previous auction. Dealers represented 58.4% of the bids, with direct bidders at 13.66% and indirect bidders at 27.94%. For takedown, bidders took 20.71%, with direct bidders at 18.49% and indirects were awarded 60.8%.
US indices fell, led by a NASDAQ decline, ahead of a hot November inflation print Friday that could alter the pace of tapering that the Federal Reserve is widely anticipated to unveil next week.
The Dow Jones Industrial Average eased by 0.1% to 35,704.33, with the S&P 500 lower by 0.3% and NASDAQ down by 0.8% after midday on Thursday, even as jobless claims plunged to the lowest level in more than five decades.
Energy and real estate were among the steepest decliners intraday, with all but two sectors, healthcare and financial, in the red. The 10-year US Treasury yield retreated by 2.5 basis points to 1.48%, narrowing the gap with the two-year yields, which was little changed at just under 0.68%.
The US Consumer Price Index is forecast to grow at an annualized rate of 6.9% in November, up from a 6.2% recorded in the previous month, according to data compiled by Trading Economics.
“Federal Reserve communications have shifted markedly in recent weeks to suggest more concern about the inflation outlook while also signalling a more aggressive tapering,” Scotiabank Chief Economist said in a research note Thursday.
“As a result, we now expect the Fed to raise interest rates by 25 [basis points] in June followed by another 75 bps of tightening by year-end, with a risk of an earlier launch to the hiking cycle.”
West Texas Intermediate crude oil dropped $0.92 to $71.44 a barrel intraday. UK Prime Minister Boris Johnson decided to renew certain COVID-19 restrictions in England as cases of the new omicron variant of COVID-19 continued to rise.
“Omicron is causing renewed restrictions on public life to be imposed in additional countries,” Commerzbank analyst Carsten Fritsch said in a research note. “Oil demand is unlikely to escape completely unscathed, though the effects will probably not be nearly as serious as initially feared.”
Initial jobless claims in the US fell by 43,000 to 184,000 during the week ended Dec. 4, the lowest level since 1969. Analysts in a survey compiled by Bloomberg had expected claims to come in at 220,000.
In the metals markets, gold was down 0.5% to $1,777.40, silver was down 2.2% to $21.89 an ounce and copper was down 1.4% to $4.33 per pound. Among energy ETFs, the United States Oil Fund was down 1.3% to $51.72 and the United States Natural Gas Fund was up 1.3% to $12.66. # US 30-Year Auction High Yield Slips, Demand Slightly Higher
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