By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices erased a loss Wednesday, leaving yields at their lowest level in about five weeks, ahead of the government’s sale of benchmark 10-year notes at the lowest yield ever.
Also in focus, the Federal Reserve is slated to release minutes from its latest monetary-policy meeting.
Yields on 10-year notes 10_YEAR +0.33% , which move inversely to prices, erased a rise to trade little changed at 1.50%, their lowest level in about five weeks. A basis point is one one-hundredth of a percentage point.
Yields on 30-year bonds 30_YEAR +0.04% came off a high of 2.63% to trade at 2.60%.
Five-year-note yields 5_YEAR 0.00% were little changed at 0.62%, their lowest level since early June.
At 1 p.m. Eastern time, the Treasury Department will auction $21 billion in 10-year notes.
The auction yield is likely to come near the day’s current level, well below the current record-low at an auction of 1.622%, set last month. See recent Treasury auction results.
The auction is a reopening, meaning the debt sold will carry the same maturity date and coupon as the original securities, in this case sold in May.
At the last four reopenings, bidders offered to buy an average of 3.17 times the amount of debt sold, according to CRT Capital Group.
Indirect bidders, a group which includes foreign central banks, bought 39.4% of recent sales, on average.
Direct bidders, a group which includes domestic money managers, purchased another 17.2% on average.
The bulk of the remaining auction goes to primary dealers, who tend to turn around and resell the newly bought securities into the market, pressuring prices down. A higher proportion of an auction bought by indirect and direct bidders is considered better for the market and the issuer – the government.
At 2 p.m. Eastern, the Fed will release minutes from its latest Open Market Committee meeting, when it extended the bond-purchase program known as Operation Twist. Eyes remain on Europe as well.
“With 10-year yields flirting with the psychological 1.50% level for days now, it’s hard to argue for very strong demand for 10-year notes despite the lurking euro zone risks, especially in the absence of a near-term catalyst,” said George Goncalves, a bond strategist at Nomura Securities.
Treasury yields ended Tuesday at their lowest level in about five weeks as more uncertainty out of Europe kept traders shifting into the relative safe-haven status of bonds. Read about Tuesday’s bond rally.
Deborah Levine is a MarketWatch reporter, based in New York.
