NEW YORK: US Treasury debt prices were little changed on Monday after rallying earlier in the session on safe-haven buying following an explosion in midtown Manhattan which New York Mayor Bill de Blasio described as an “attempted terrorist attack.”
The US Treasury Department held two auctions - three-year and 10-year notes - that showed mixed results. Both elicited little market reaction, however.
Overall investors were hesitant to extend current positions ahead of the US 30-year bond supply and the Federal Reserve’s monetary policy decision on Wednesday, said Tom Simons, money market economist at Jefferies in New York.
The Fed is widely expected to raise interest rates this week and is likely to upgrade its US economic forecasts given the recent spate of upbeat data. Fed funds futures are also pricing in about a 60 percent implied chance for a March rate increase.
Treasuries rallied earlier after a Bangladeshi man with a homemade bomb strapped to his body set off an explosion at a New York commuter hub during rush hour on Monday.
The suspect, who is currently in police custody, had burns and lacerations while three other people, including a police officer, sustained minor injuries.
The buying of Treasuries made the US three- and 10-year notes more expensive going into their auctions, Jefferies’ Simons said.
The Treasury’s $24 billion three-year note sale was well received, with the note fetching a high yield of 1.932 percent, lower than market expectations of 1.935 percent at the bid deadline.
The $20-billion US 10-year note, however, was lacklustre.
The yield was at 2.384 percent, higher than market expectations of a yield of 2.380 percent.
US benchmark 10-year Treasury note yields fell as low as 2.35 percent on safe-haven demand before they retraced back to 2.386 percent by afternoon trading.
US 30-year bond yields were last at 2.773 percent, slightly down from 2.775 percent late on Friday.
Three-year note yields rose to 1.940 percent, up from Friday’s 1.915 percent.
The US Treasury will sell $12 billion in 30-year bonds on Tuesday.
Consumer Price Index data on Wednesday is also a key focus for the market this week as inflation continues to run below Federal Reserve forecasts.—Reuters
