October 26, 2021

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US bond yields rise ahead of debt auction and inflation data

US bond yields rise ahead of debt auction and inflation data

FILE PHOTO: The US Treasury Building in Washington. September 29, 2008. REUTERS/Jim Borg/File Photo

CHICAGO (Reuters) – Yields at the long end of the US Treasury curve reached their highest level since mid-July on Tuesday, buoyed by the debate over stimulus easing from the Federal Reserve and ahead of a debt auction of 126K million. Inflation report.

* The benchmark 10-year bond yield, which stood at 1.346%, the highest since July 15, rose 2.3 basis points, at 1.3405%. 30-year notes that reached 1.985% improved 2.3 basis points to 1.9842%.

*The 10-year yield, which has risen for the fifth consecutive session, was heading towards the longest daily ascending streak since late January and early February, causing a sharp rally that pushed returns from 1% to 1,776% in late March.

* Nuveen’s Tony Rodriguez indicated “some standing” in the market ahead of Wednesday’s July Consumer Price Index (CPI) data release and this week’s debt auctions.

* He also added that although the strong July employment report released on Friday somewhat advanced interest rate expectations, inflation expectations remain ambiguous. “It is clear that tomorrow’s data will provide some clarity. It will not resolve the uncertainty about the direction of inflation,” he said.

* This week’s Treasury auctions will begin Tuesday with $58 billion in three-year notes, followed by $41 billion in 10-year notes on Wednesday and $27 billion in 30-year notes on Thursday.

* Before the auction, the yield on the three-year bond was up 1.1 basis points at 0.4369%.

* The closely watched portion of the yield curve, which measures the difference between two-year and 10-year bond yields, improved by nearly 1 basis point at 111.08 basis points.

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(Additional reporting by Dara Ranasinghe in London and Karen Pirog in Chicago; Editing by Carlos Serrano in Spanish)