The U.S. Department of the Treasury auctioned $13 billion in 30-year bonds today at an average yield of 3.248%, the highest yield in a year. Yields on 10-year notes rose 3 basis points following the auction to 2.06%.
The bid-to-cover ratio was 2.43, the lowest level since August, and probably the main force behind the higher yields. Investors appear to be willing to take on more risk in the equity markets, leading to lower prices and higher yields for U.S. securities. The lower number of claims for jobless benefits reported earlier today also figured into the auction results.
Producer price inflation rose more than expected today, but consumer prices have remained in check and worries about inflation have been relegated to the back burner, at least for now.
The rise in the 10-year yield puts an exclamation mark on investors’ belief that the global economy in general and the U.S. economy in particular are not as bad as everyone had feared they would be following sequester and heading into a possible government shutdown later this month.
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