By Sam Goldfarb
U.S. government bond prices climbed Wednesday as a positive reception for a 10-year note auction reinforced the growing appetite for Treasurys following the large postelection selloff.
The $20 billion in new notes were sold at a 2.342% yield, eliciting $2.58 in bids for each dollar offered, the highest ratio for a 10-year auction since June. Indirect bidding, a proxy of foreign demand, was 70.5%, the highest since August.
The auction followed a $24 billion sale of three-year notes Tuesday that was also popular among investors. A $12 billion sale of 30-year bonds is scheduled for Thursday.
The yield on the benchmark 10-year Treasury note dropped as low as 2.328% after the auction, according to Tradeweb, before settling at 2.368%, compared with 2.379% Tuesday.
Yields fall when bond prices rise.
Treasurys were already stronger heading into the auction, benefiting from an earlier shift away from stocks during President-elect Donald Trump's press conference.
In the weeks after the November election, Treasury yields soared as investors bet that Mr. Trump and a Republican-controlled Congress would increase the budget deficit by cutting taxes and boosting spending on infrastructure -- policies that could diminish the value of outstanding government debt by adding to the supply of bonds and stoking inflation.
More recently, though, bond prices have crept upward as some investors bet that the selloff may have been overdone.
Bond prices dropped on Friday after the latest jobs report showed solid wage gains, a possible sign of broaderinflation, which chips away at the fixed-rate returns of bonds. But prices recovered Monday and have been mostly flat since.
"It feels like the market is consolidating," said John Briggs, head of strategy for Americas at Natwest Markets. After digesting major economic reports last week, there has been little for traders to react to this week, although that could change Friday with the release of retail sales data, he added.
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(END) Dow Jones Newswires
January 11, 2017 15:50 ET (20:50 GMT)
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