(CEP News) - Long-dated Treasuries are selling off on Thursday, pushing yields higher after a soft 30-year auction and suggestions that the Fed may not want to buy government debt. Meanwhile, yields at the front end of the curve are down alongside stocks.

U.S. two-year yields are down 2.4 bps to 0.89%, with five-year yields flat at 1.75%, 10-year yields up 3.2 bps to 2.79% and 30-year yields up 6.9 bps to 3.51%.

The latest selloff comes after the auction of $14 billion in 30-year Treasury notes drew a yield of 3.540%, much softer than the ‘when issued’ yield of 3.508%.

The buying pressure earlier came from a report in the Wall Street Journal saying that “the Fed has tiptoed away from a proposal to buy long-term government bonds.” The report also says that the idea “is still on the table” but there are worries it would swell the balance sheet to unmanageable levels.

David Ader, U.S. government bond strategist at RBS Greenwich Capital, said he is giving little credibility to the Journal report because it was buried deep in a story on the fourth page.

“If this was a leak of value it would not be on A4,” he said.

Supporting the Treasury market are comments from the China Banking Regulatory Commission. They said U.S. Treasuries are the “only option” for the country to buy. There had been speculation that China might temper its buying of U.S. debt because of the Obama administration’s suggestions that China was manipulating its currency.

All data taken at 1:23 p.m. EST.

By Adam Button, abutton@economicnews.ca

CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca

The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.

A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.

Posted in Categories: Economy, Eurozone, Releases, USA.

Subscribe by RSS Subscribe by Email