MW: Treasurys decline as markets calm and stocks head higher
Auction of $40 billion in 5-year notes coming later in session
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices fell Wednesday, with yields rising from their lowest levels in nearly 13 months, as a break from bad international news gave some investors enough comfort to move assets away from the relative safe haven of U.S. debt.
Yields on 10-year notes (UST10Y 3.24, +0.08, +2.41%) rose 7 basis points to 3.23%. The 10-year's yields hit 3.06% on Tuesday, their lowest level since April 2009.
Bond yields move in the opposite direction as their prices. A basis point is 0.01%.
Yields on 2-year notes (UST2YR 0.82, +0.06, +8.17%) increased 3 basis points to 0.82%.
"The panic has exhausted itself for now," CRT Capital Group strategists said. "The approach of 3% in 10-year notes surely is worth some stall or at least an inhibition."
U.S. stocks opened broadly higher, with Dow Jones Industrial Average (DJIA 10,149, +104.90, +1.04%) rising almost 1% on the heels of a late recovery in equities Tuesday.
Treasurys stayed lower after a Commerce Department report said orders for durable goods in April rose a stronger-than-forecast 2.9%. Read about durable goods.
Also indicating strength in the U.S. economy, separate data said new-home sales in the U.S. jumped 14.8% in April to a 504,000 pace, stronger than analyst expected.
The dollar turned up against the euro, which had gained in the European and Asian trading sessions. Read about dollar, euro.
The dollar index (DXY 87.03, +0.25, +0.29%) , which tracks the U.S. unit against a basket of six major currencies, rose to 86.997, from 86.799 in late North American trading on Tuesday.
Also, the Treasury Department is selling $40 billion in 5-year notes (UST5YR 2.06, +0.08, +4.10%) , a smaller amount than last month and the first reduction in size for the maturity since January 2007. See recent auction results.
Bids are due at 1 p.m. Eastern time.
At the last four sales of 5-year debt, all for $42 billion, bidders offered to buy an average of 2.71 times the amount of debt sold, according to CRT.
Indirect bidders, a group that includes foreign central banks, bought 45.5% of the last four, on average. Direct bidders, which include domestic money managers, purchased another 11.3% on average.
"With the market likely in a correction mode, the auction will be a tough one to handicap," said RBS Securities' strategist John Richards. "The sector is expensive both absolutely and relatively."
On Tuesday, the government sold 2-year debt at the lowest yield on record -- thanks to the flight-to-quality lately -- but demand was still weaker than many analysts had anticipated. See more on 2-year bond auction.
